CBD Sale Boosts 2023 Retail Transactions Record

In what has now become the largest retail transaction for 2023, the Krongold family has sold two key freehold properties in the heart of the Melbourne CBD.

The two properties, Mitchell House and Milledge, at the corner of Lonsdale and Elizabeth streets in Melbourne’s CBD, have been sold to a local investor who is backed by an offshore syndicate.

They were sold in December 2023 for $56 million with an expected yield of 4.17 per cent.

Transaction levels were low in the Melbourne CBD over 2023, making this one of the biggest deals for the year with settlement occurring in January 2024.

The properties sit in one of the key retail areas between Melbourne Central Shopping Centre and the Emporium. 

They were listed for sale late last year.

Both properties were held for more than 50 years by the Krongold family. 

Textile giant Henry Krongold and businessman Sidney Hack bought both properties for $1.5 million in 1970. 

Famed architect Harry Norris designed the six-storey Mitchell House for brush maker Thomas Mitchell and Co in the late 1930s.

Initially intended to have 10 storeys, the building was built within five months and was used by the Australian Surveyor Corps in 1940.

It was sold to Krongold and Hack in 1970 with the Mitchell company shutting down in 1986.

Mitchell House was added to the Victorian Heritage Register in 2010.

▲ The Harry Norris-designed Mitchell House at night in the heart of Melbourne's CBD.

Cushman and Wakefield’s Oliver Hay, Daniel Wolman and Leon Ma along with Charter Keck Cramer’s Tom Byrnes and Scott Keck handled the transaction. 

Ma confirmed that there had been high interest in the properties and that offshore investors were still keen on the right assets.

“Forty-three per cent of the capital offered was offshore-generated, originating from Macau, China and Singapore and we expect further interest from similar groups throughout 2024 as they look to snap up iconic assets around Melbourne,” Ma said.

The climbing cost of borrowing with the official cash rate target rising to 4.35 per cent by November 2023 had a negative impact on transactions within the CBD with asset values not increasing and investors less keen and more cautious. 

Office transactions dropped considerably over 2023, according to MSCI Real Assets data. 

Cushman and Wakefield expect to see a return of overseas investors in 2024 with renewed interest in CBD assets with more office workers returning to the city and more international students arriving. 

Facilitating this are moves by the City of Melbourne to encourage people to return to the city as workers, consumers or residents.