Resimax Group director Ozzie Khier has offloaded a West Melbourne office building for $38.5 million, the second in a portfolio of three adjoining properties held by Kheir along with developer Frank Palazzo and Probuild founder Phil Mehrten.
Private real estate investors Avari Capital Partners acquired the six-level, 7362sq m Sands & McDougall building, on a prominent 2000sq m corner site at 355 Spencer Street.
The site comes with more than 90 metres frontage, and a permit for a 23-storey mixed-use project.
Avari founder Alan Liao said the acquisition was in line with the firm’s strategic focus on value-add real estate investment.
“355 Spencer Street represents a structurally sound, superbly designed and aesthetically pleasing building. To knock it down and re-develop would not achieve its best and highest use,” Liao said.
An extensive refurbishment was planned, including an internal spec fit-out, service upgrades and add end-of trip facilities, as well as the activation of the central courtyard with a cafe or bar to provide tenants with a communal space.
“We believe this unique proposition will attract strong leasing interest and will ultimately improve the value of a magnificent building,’’ Liao said.
The sale comes hot on the heels of the first transaction in the portfolio of properties marketed as the "Melbourne Three", a converted 1838sq m warehouse on an adjacent 920sq m site at 102-108 Jeffcott Street, which is expected to make way for a high-density apartment development.
Kheir, Mehrton and Palazzo had purchased the three properties in the western corner of Melbourne’s CBD as a package for $37.7 million—355 Spencer Street for $27.2 million—just under five years ago, with a view to hotel development, acquiring the amalgamated site from investment house Hume Partners in 2015.
After canning plans to pursue a 190-key mixed-use hotel project, the owners appointed CBRE agents Mark Wizel, Josh Rutman, Lewis Tong and Scott Orchard to sell the three properties in January.
Wizel said the outcome had been very pleasing for both the purchaser and vendors.
“In deciding to on-sell the portfolio the vendors have presented some very attractive assets to an obviously hungry market as enquiry and results on the two sales to date have shown.
“In the context of the current market risk factors and forecasts for where the office market may be headed, the pricing is very strong,” Wizel said.
“If it provides any indication of what is to come then we may see a much more positive market in the near-term than anyone would have dared forecast.
"There is no doubt that enquiry and transaction volumes for commercial properties have declined as a result of Covid-19, but some of the activity and successfully completed deals we have seen over the past month indicate that astute buyers continue to look for opportunities in what is arguably the most uncertain times we have seen since the second world war,’’ Wizel said.
The last of the three properties, 371 Spencer Street, is now for private sale with an asking price of $10 million.