Growthpoint Spends $125m in Melbourne Fringe Office Sector

Growthpoint Properties has paid $125 million for a mixed-use asset with a 4.71 per cent yield in Melbourne’s CBD fringe office sector.

The building at 141 Camberwell Road in Hawthorn East has 10,249sq m of net lettable area with views of the city skyline, 304 car parking bays and a 6.9 year WALE. It was completed by Pamato Corporation in 2020.

Cushman and Wakefield’s Leigh Melbourne, Nick Rathgeber, Mark Hansen and Josh Cullen brokered the deal on behalf of Blueprint Projects.

“Growthpoint Properties were attracted to the strength of the tenant covenant and the strong WALE providing security of income for the long term,” Rathberger said.

The property is part of the Camberwell Junction shopping precinct and is 600m from Camberwell station. 

Melbourne said the property had received strong interest.

“Bids were received from onshore and offshore capital, and from REITs and private investors, demonstrating a diversification of capital sources,” Melbourne said.

 “The sale was achieved following a competitive expressions of interest process, a strong sign of things ahead for the Melbourne investment market.”

▲ Inside the foyer at 141 Camberwell Road, Hawthorn East, just bought by Growthpoint Properties for $125 million. Source: Growthpoint Properties

The sale is part of the growing trend of investment in office spaces in the CBD fringe suburbs as companies start transitioning employees back to a hybrid or full time work week as restrictions are dropped. 

Rathberger said that 101 Moray Street in South Melbourne and a 50 per cent stake in 510 Church Street in Cremorne had sold over the $100-million mark—$205.12 million and $130 million respectively—in the past 12 months.

“The success of these campaigns is also a demonstration of the maturation of the Melbourne metro office market, with 510 Church Street being a partial interest sale and 141 Camberwell Road forming part of an owner’s corporation,” Rathberger said.

Colliers’ national director Peter Bremner said that a record $1.5 billion was invested in Melbourne’s office market in 2021 with 40 transactions, five of which were above $100 million and three above $200 million.

“High-net-worth investors and family offices were the most dominant buyer type throughout 2021, followed by institutions and owner occupiers,” Bremner said.

“Due to Covid disruptions throughout the year, domestic buyers were a clear standout purchasing 38 of the 40 properties which transacted in 2021.

“We expect offshore buyers to make Australia a priority for investment in 2022 as travel restrictions continue to ease.”

Colliers’ director of capital markets Rachel Clohesy said that 18 of those transactions were in the city fringe market, totalling about $637 million, and that Growthpoint was a key player.

“The five most significant transactions, in size, were acquired by major Australian institutions including Centuria, Charter Hall, Growthpoint and Irongate,” Clohesy said.

Growthpoint already owns several properties in the suburbs of Richmond, Mulgrave, Preston, Truganina, Keysborough and South Melbourne. 

The REIT has a portfolio of 58 office and industrial properties across Australia including the 141 Camberwell Road site valued at $5.1 billion with a 97 per cent occupancy rate and 6.3 WALE across all of them.