Strategic strata moves rattle Melbourne's city grid

A strategic move by Salta has marked an intriguing start to the year for the CBD strata market, with the property developer acquiring a second unit at 55 Exhibition Street.

The move gives Salta a stronger say in the seven-storey building than its neighbour, the blue-chip "tower of power" at 101 Collins Street, which is owned by the Commonwealth Superannuation Corporation.

Salta made its move on level one of the former ACCI house just before Christmas, using the 63 Exhibition Street investment vehicle that is developing a hotel next door.

Title deeds show Salta paid $5.1 million for level one, a property which last changed hands in 1993 for $365,000 during the depths of the early 1990s recession.

The new purchase - at $20,816 per sq m - pips the last acquisition in the building. CSC paid $4.75 million or $19,388 per sq m for level three last September.

Salta now owns two levels of the seven-storey building. R & D Perry Investments own a further two and the penthouse apartment owned by veteran corporate raider Peter Yunghanns is still up for grabs after passing in at auction late last year.

Colliers International agent Anthony Kirwan said discussions with potential buyers of the penthouse are ongoing.

Alcaston penthouse

Meanwhile, Mr Kirwan, with colleagues Chris Ling and George Davies, has sold another more highly sought-after penthouse at Alcaston House around the corner at 2 Collins Street. The 157 sq m apartment fetched $4 million or $25,478 per sq m in an off-market deal.

The only property on level seven, it boasts two balconies and views over Treasury Gardens. The buyer is understood to be a surgeon who was the underbidder on the penthouse back in 1984.

Last September, developer and honorary consul to Monaco Andrew Cannon sold his level two office at Alcaston House for $1.46 million. Title deeds lodged in January reveal the new owner to be George Stamas, owner of Adelaide-based cleaning group GJK Facility Services.

While other strata offices fail to reach the heights achieved at 55 Exhibition Street and 2 Collins Street, they are more indicative of the broader market.

Technology owner-occupier DGIT Systems sold its level four office at 313 La Trobe Street for $3.1 million - a 30 per cent premium on its purchase price.

DGIT Systems originally bought the 470 sq m office in 2016 for $2.2 million. It was sold to a group of local investors as part of a three-year sale-and-leaseback arrangement.

The deal was struck by CBRE agents Julian White, Alex Brierley, Nathan Mufale and Chao Zhang.

While investors made the purchase, most of the interest in the office was from owner-occupiers, Mr White said.

"Rapidly rising rents, low vacancy rates and low interest rates are driving interest," he said.

"In particular, we are seeing small-to-medium businesses looking to control their leasing expenses and build wealth."

Normanby Chambers

Strata office was once one of the city’s least attractive investment classes but that all changed about five years ago. Normbanby Chambers at 430 Little Collins Street was renovated and revamped by developer-publisher Morry Schwartz and his step-daughter Zahava Elenberg’s firm Elenberg Fraser in 2005.

Shannon Bennett opened Vue de Monde on the ground floor and the offices above were sold as strata.

Elenberg Fraser's company Covola is selling two units on the first floor through CBRE agent Alex Brierley at around $10,000 per sq m.

Upstairs, Colliers has seven units on level two for sale. The vendor is a syndicate of family superannuation funds, some of which are associated with SkyBus Co-chief executives Michael Sewards and Adam Begg.

Mr Kirwan said the units are being sold in one line and are expected to sell for around $2 million.

Hospital pass

Calvary Healthcare has snapped up Healthscope’s Parkdale hospital, paying $10.2 million for the 4765 sq m site which was briefly held by collapsed property group Steller.

The health care provider has been leasing the 3500 sq m hospital at 152 Como Parade West since Healthscope exited the site in 2017.

Calvary, which has 14 public and private hospitals, is using it as an interim palliative care facility while its Bethlehem hospital in Caulfield undergoes a major redevelopment.

Calvary told Capital Gain it is "potentially looking to develop the Parkdale site" for its retirement services division when the lease expires. It has 17 retirement communities in its portfolio.

The deal, struck on a 4.4 per cent yield, was negotiated by CBRE agents Julian White, Josh Twelftree, Dylan Kilner and Jimmy Tat in conjunction with Magree Property Advisory’s Dan Magree.

Mr White said the underbidder on the site was a developer.

Steller bought the site in August 2018 for around $11 million and planned to make it the anchor of a new aged care division. That move didn’t save them and Steller spectacularly collapsed last year.

North Melbourne

A three-storey office building at 133 Abbotsford Street, owned and occupied by Photomapping Services, has sold for $6.375 million.

The off-market transaction, handled by Knight Frank agents Andrew Hansen, Jack De Lutis and Ed Wright, represents a yield of 4.2 per cent, a building rate of $9107 a sq m and a land rate of $9200 per sq m.

The buyer is understood to be a local investor keen to reposition the property which has views across the city.

The North Melbourne property is next door to the proposed new headquarters for the Victorian Automotive Chamber of Commerce.

The VACC paid $8.8 million for 644-658 Victoria Street in 2018 or $6567 per sq m. Land rates are rising sharply in the city-fringe suburb which is adjacent to the new Arden precinct.

Mr Hanson has sold a slew of North Melbourne properties, including 613 King Street for $5.9 million to geographic mapping company Esri Australia.

Auction move

Third generation auction house Christian McCann Auctions is moving the family business out of Richmond for the first time in nearly 90 years.

But Christian McCann is not moving too far, signing a lease on a 1361 sq m warehouse at 7 Harper Street Abbotsford near the Yarra River.

Mr McCann said the new warehouse is three times the size of his current premises at 426 Burnley Street which he has occupied for ten years. Gray Johnson agent Rory White negotiated the lease which is around $125,000 net per year.

The company's first auction for the year will be on March 8.