Property fund manager ISPT has partnered with industry super fund HESTA to develop a $140-million office building in inner Melbourne.

The project planned for St Vincent’s Fitzroy hospital campus at 31-35 Victoria Parade is a 12-storey tower offering around 12,000sq m of lettable office space.

ISPT and HESTA hope to obtain a permit to co-develop the 1350sq m site after acquiring the 50-year ground lease from St Vincent’s Health Australia for an undisclosed sum.

ISPT and HESTA’s development proposal, designed by Bates Smart, would see the existing heritage-listed Brenan Hall retained and incorporated into the ground floor of the 12-level-plus-basement, mixed-use healthcare accommodation building.

As part of the agreement, St Vincent’s will pre-commit to lease approximately 5000sq m of the building for 10 years, relocating its existing administration, office and health services from other hospital and satellite campuses.

ISPT general manager of healthcare and life sciences Robert Pepicelli said the St Vincent’s co-investment was an “exciting new partnership for all parties in the heart of Melbourne’s healthcare precinct”.

“We have an opportunity to combine ISPT’s resources and expertise with our investors’ aligned capital and our operator partners to ensure ongoing investment into the important healthcare and life sciences sector, which is a major employer and driver of economic activity in Australia,” Pepicelli said 

“We’re actively partnering with St Vincent’s to continue its valuable work in providing important medical research and health services to Australians.”

Alongside ISPT and HESTA’s proposed Victoria Parade tower, a new 12-storey medical facility worth $180 million is being constructed next to the St Vincent Private Hospital, with stage one of the redevelopment beginning in October and due to be completed by early 2024. 

As well, the Victorian government recently approved construction of the $200-million Aikenhead Centre for Medical Discovery on the site of the former Aikenhead building. It will be Australia’s first hospital-based biomedical engineering research centre.

The play marks ISPT’s first commitment in the burgeoning healthcare and life sciences real estate sector—an asset class forecast to grow to $10 billion in the next five years.

The life sciences alternative asset class includes biotechnology, pharmaceuticals, biomedical technologies, healthcare technologies and medical equipment, botanical science, and environmental sciences.

It represents about 2 per cent of the total securitised property market in Australia, but the sector is growing and total assets under management are valued about $6.5 billion.

New funds are now being launched to hold such assets and existing platforms, such as Canada’s NorthWest Healthcare Properties, are on an aggressive expansion path.