The popularity of the build-to-rent market in Melbourne cannot be overstated. Presumably encouraged by the state government’s tax concessions for build-to-rent projects, properties all over the city are being purchased and designated for high density residential development, with the explicit intention of renting these properties out upon completion.
With this trend proving widespread in the CBD-adjacent North Melbourne, Pace Development Group are now looking to divest their 1.32-hectare permit-approved North Melbourne supersite at 68-102 & 103 Alfred Street & 87-105 Racecourse Road, North Melbourne.
“Given the scale of the site and momentum of build-to-rent activity in the precinct, timing is right to divest,” stated Chief Operating Officer of Pace Development Group, James Simpson. He’s right in the timing, as several properties in North Melbourne and Kensington have recently been sold, all with build-to-rent intentions attached.
In late 2021, the global real estate giant Hines purchased a 3,068 sqm landholding on Macaulay Road, just over a kilometre away from Pace’s asset. That property sold for a sizable $29.5 million. That deal followed two additional major sales for sites on Macaulay Road, including a $48 million agreement for build-to-rent developer Local to acquire 346-350 Macaulay Road.
Acting under instructions from transaction manager, Advise Transact, Stonebridge Property Group's Julian White and Chao Zhang are working in conjunction with CBRE's David Minty, Nathan Mufale and JJ Heng to bring Pace's property to market. And with developers frantic to seize further opportunities in the area, the agencies are both confident that the location of the site, paired with its Commercial 1 and Mixed-Use zoning, provides the flexibility necessary to captivate buyers who are interested in engaging with the build-to-rent market.
“The site allows for a master planned village to be created, that will be precinct defining,” suggested Stonebridge’s Julian White. “There are also excellent market fundamentals to support a project of this scale, including an impending undersupply of residential accommodation in Melbourne and a compressed rental vacancy rate.”
The property possesses planning permission to deliver more than 54,000 sqm of NSA/NLA over three stages. As such, it is one of the largest publicly marketed and permit-approved sites to go up for sale in Melbourne this year, and given that it possesses exposure to both Alfred Street and the always busy Racecourse Road, it has a great deal of potential for both residential and commercial projects.
“With nearby Kensington being the first mover and most active CBD fringe Build-To-Rent market, ‘The Village’ will offer buyers a de-risked gateway site closer to the CBD at a more attractive value proposition,” stated CBRE’s David Minty.
Minty’s assertion that the property serves as a “de-risked gateway site” seems appropriate. North Melbourne and its surrounding suburbs are able to provide high density commercial and residential property, whilst simultaneously maintaining amenities typically reserved for suburbs further away from the CBD. Additionally, the landholding sits only 250m away from the 57 tram, which provides access to the city’s facilities, as well as the Royal Children’s Hospital and its surrounding medical establishments. That, in conjunction with the Flemington Bridge Train Station’s proximity, means accessibility to the site is streamlined and convenient.
“The current residential vacancy rates in North Melbourne have returned back to pre-Covid levels and we anticipate that Net Overseas Migration of students and skilled workers will return to the historical levels observed in Victoria,” explained Luke Mackintosh, who leads the built-to-rent arm of the Real Estate Advisory team at Big 4 consultancy EY. “This will continue to create a scarcity in rental stock with the private residential development sector facing significant difficulties.”
Pace knows that they have a market who are eager for properties like theirs, and as such, their price expectations are lofty but measured. They anticipate market interest to be upwards of $45 million, and with such a comprehensive list of features adorning this property, they are likely to hit that target. Expressions of Interest are due Wednesday, 29th of June at 2pm. You can view the listing for the property here.
Stonebridge's Julian White recently wrote about the Victorian property market in Issue 32 of The Property Development Review. You can read his thoughts here.