A fully leased, boutique style office building at South Melbourne has sold to a New South Wales investor for $4.2 million on a record low 4 percent yield
A fully leased, boutique style office building at South Melbourne has sold to a New South Wales investor for $4.2 million on a record low 4 percent yield in an Expressions of Interest campaign through Savills.
The property is located within Yarra Place – a laneway made famous by Melbourne café institution St Ali, owned by Salvatore Malatesta.
State Director, CBD & Metropolitan Sales, Clinton Baxter, who brokered the 21 Yarra Place deal with Nick Peden and Benson Zhou said the result reflected the insatiable appetite of investors seeking to secure prime city fringe assets.
“This is another example of just how strong the market is for Melbourne city fringe property and with the population continuing to grow and vacancy rates falling, yields remain under pressure,” Mr Baxter said.
He said the very strong $8,500 a square metre building rate and $25,300 a square metre land area rate were also indicative of the no-expense-spared, Hayball design and architecture.
The state-of-the-art, four level building, features a timber façade, ultra-modern fit-out, the use of eco-friendly materials, an internal vertical garden, all round natural light, secure parking for eight vehicles and CBD and Port Phillip Bay views.
The property was sold fully leased to Caramel Creative on a new five year term with two five year options at a current net annual rental of $168,000.
Mr Peden said the property had been extremely popular with a huge number of prospective buyers, with offers coming from local, interstate and Asian based investors attracted primarily by the prime South Melbourne location, the immaculate near new building, extremely strong tenant and the property’s obvious potential for ongoing growth.
He said the result had not been unexpected given the long list of investment credentials which also included strong rental growth potential and generous depreciation benefits.
“There are few, if any, opportunities like this on the market in Melbourne at the moment which provide prospective purchasers with such exceptional long term benefits,” Mr Peden said.
Mr Zhou said the underlying value of the prime South Melbourne site was another strong point.
“Property in South Melbourne has exceptional potential simply by virtue of its proximity to the CBD and the benefits that proximity can offer especially to businesses and that has driven strong growth in the precinct over the last few years,” Mr Zhou said.