Melbourne office assets in the sub-$15 million category are experiencing an upturn, as properties continue to transact in a COVID-19 market – according to recent data from CBRE.
The recent sale of 30 Inkerman Street, St Kilda, to a local investor, on a sub 4.50% yield reflects the strong market demand in an evolving market. The three-level, 1,395sqm commercial office building was sold by CBRE’s Rorey James, Scott Orchard, JJ Heng and Scott Hawthorne.
“The campaign commenced at an interesting time for the market, with the sales process taking place during the announcement of COVID-19 officially being declared a pandemic,” Mr Orchard said.
“As buyers’ ability to physically inspect the building became restricted, the implementation of virtual, real-time inspections played an integral part in driving competition and influencing a positive result.”
The deal follows a flurry of investment activity since the COVID-19 outbreak was declared a pandemic, particularly assets in the sub-$15 million sphere, including Ryan Ouyang’s office building in Wellington Road, Mulgrave, for $9.1 million, and investor Robert Anson’s neighbouring Mulgrave office sold for $6.6 million in March.
“Good results are still being achieved in the current climate – our CBRE Melbourne Middle Markets team has sold in excess of $80 million in this space since the announcement of a pandemic,” Mr Orchard added.
Mr Hawthorne commented that interest and activity across assets and price ranges had been encouraging, but that it was currently clear investors in the sub-$15 million space had been the most active over the past few weeks.
“Investors are continuing to pursue well located office properties with quality fundamentals and buyers are aware that there will be a lot less stock on the market this year, so their ability to buy over the next three to six months is somewhat restricted – causing quality assets in the sub $15 million sector to be hotly pursued,” Mr Hawthorne continued.
The next St Kilda freehold investment to test the market will be the nearby 100 Barkly Street on the corner of Inkerman Street. The CBRE team expects 100 Barkly Street will attract strong interest from investors wanting to take advantage of the building’s fully leased income profile and prominent corner position, with interest received north of the $4.5 million mark.