Twenty years after he first acquired it, a Sydney businessman is selling a rare 8000-square-metre-plus office site on the banks of the Yarra River in Melbourne’s popular inner-eastern fringe.
Industry commentators say the island site at Cremorne—with four street frontages and commanding views of the Melbourne cityscape—will fetch $80 million to $100 million.
The former textiles warehouse, which sits on 8320sq m at 167-169 Cremorne Street, houses ASX-listed essential services providers Ventia.
An international expressions-of-interest campaign is being handled by global commercial real estate and investment managers JLL, who described Cremorne as “the country’s most proven development precinct”.
Head of capital markets Josh Rutman told The Urban Developer it was rare to see a site of this size come to market in that neighbourhood.
“Most of the sites in Cremorne are around 500 to 1000 square metres,” he said. “This is at least eight times the size, and there’s very, very few that have traded over 5000sq m in the past couple of decades.
“It’s got four street frontages, it’s got scale, so it allows you to do a number of different development outcomes, it’s got an existing building on it which is still of very good quality and it’s generating income from an ASX-listed tenant.”
However, Rutman said, the real value was in the future potential of the site.
“And the fact that you’ve got holding income from a reliable tenant is a really handy, because as you know these developments can take years,” he said. “To have an income producing property, from a financing perspective, is a very good thing.”
Online records show the site—bounded by Cremorne, Bent and Dover streets as well as the CityLink Freeway—last changed hands in June of 2003 for $8.2 million.
Cremorne— just 3km from the centre of Melbourne—is one of the city’s most sought-after commercial addresses and is home to national corporations including Seek, Tesla, Carsales, REA Group, Domain, Reece and MYOB.
JLL research shows tenant demand in Yarra City Council has continued to lead the office recovery nationally after recording two consecutive years of the highest net absorption figures.
JLL head of office institutional sales Paul Kempton said they continued to field requests for scalable projects at Cremorne.
“Until about five or six years ago they didn’t actually have a lot of new stock in the Cremorne market and the existing stock had been in place for a long period of time,” Kempton said.
“Originally, that growth was tenant-led and that gave the developers confidence to build new stock because they understood the merits of doing that. Some of these were even built speculatively.”
Kempton said those buildings were now effectively full and achieving high rental income.
“So not only is the depth of tenants growing but the stock has been growing with it to keep demand. This is one of the better performing fringe office markets in Australia.”
He said that although suburbs such as South Melbourne, Carlton and Collingwood would always be good fringe office markets they were restricted in how much stock they could accommodate.
“Whereas Cremorne can actually accommodate a much larger scale of stock,” he said. “It’s up to 400,000sq m now but can probably go up to a million square metres, to be honest, over the next 10 to 15 years.
“And it will all be tenant-demand lead because the land’s there.”
