Pallas Group’s Fortis has added two more commercial sites in the Melbourne CBD fringe suburbs to its portfolio, banking on increasing demand for office space in the locations.
The sites in Richmond and South Melbourne, will be developed as prime office and retail projects and will eventually have a combined value of $108 million.
Fortis paid $16 million for the site at 1 Little Lesney Street in Richmond—the 907sq m site is next to another Fortis project, valued at $115 million, being developed at 8 Brighton Street.
A 12-storey tower with 5500sq m of floorspace is planned for the site.
The deal was brokered by Collier’s Ben Baines, Ted Dywer and Daniel Wolman.
“The site’s prime location, with direct access to world-class amenity, was a major drawcard for potential buyers, along with the planning flexibility,” Baines said.
“Although the site was permitted, it represented a genuine opportunity to amend to commercial office, residential apartments and-or hotel.”
In South Melbourne, Fortis paid $10 million for the site at 122-132 Moray Street in an off-market transaction. It is Fortis’ fifth project in the suburb.
The 697sq m site is near the under-construction Anzac Metro station as well as the South Melbourne Market, and Church and Coventry streets.
It will comprise 2800sq m across seven storeys including retail on the ground floor.
Plans for the South Melbourne site are expected to be lodged in the first quarter of this year.
“During the past we have seen an increased demand for premium city-fringe commercial offices in Melbourne,” Fortis director Charles Mellick said.
“Our latest sites in South Melbourne and Richmond will offer a high-end point of difference to the fringe office market and add to our growing half a billion dollar portfolio of commercialassets in Melbourne.”
The demand for office space in the CBD’s fringe suburbs is growing along with the market for office properties experiencing a rise in investment.
“We expect significant activity in this key market in 2022,” Collier’s Daniel Wolman said.
Fortis plans to retain both towers as long-term rental income assets.
Fortis currently has a number of commercial properties in the office fringe market in Melbourne with a the total end market value of those being developed or in planning of $1 billion. It has another $1.25 billion in property in Sydney.
“Our national commercial portfolio is currently well in excess of $1 billion,” Mellick said.
Pallas Group is the parent company of Fortis as well as Pallas Capital, the non-bank lender providing the funds for acquisition and development of both projects.