CEL Australia lists prominent St. Kilda office tower
CBRE has been appointed to unload an office building in the northern end of Melbourne’s St Kilda Road business precinct.
Located on the corner of St Kilda Road and Kings Way, the 420 St Kilda Road property comprises a 10-level office building leased to major covenants, including ANZ bank and APP Corporation.
An International Expressions of Interest campaign will be launched next month to promote the asset, which boasts 10,500sqm of net lettable space, on behalf of CEL Australia.
Over the past 24 months, the St Kilda Road office market has emerged as an attractive investment market, recording one of the highest rates of net effective rent growth nationwide of over 9%.
Commenting on the listing, CBRE’s Kiran Pillai remarked that the property was well positioned to capitalise on the continued strong demand from tenants for this location.
“Steady withdrawals of secondary space in St Kilda Road for conversion and redevelopment has underpinned incredibly strong tenant demand for space in the remaining prime grade buildings,” Pillai said.
“The property’s prime corner position at the northern end of the precinct, combined with an efficient floor plate allowing for an adaptive asset plan, will hold the asset in excellent stead long into the future.”
The location is expected to further benefit from the new Melbourne Metro Rail project with the Domain station to be located within around 300 metres of 420 St Kilda Road.
CBRE senior director Neva Courts added the St Kilda Road market had emerged as a key investment destination for domestic and offshore investors.
“420 St Kilda Road offers both security of income and growth in the short to medium term in addition to long term opportunities for the site, which could include a potential redevelopment to residential or hotel,” she explained.
Michael Ng, executive director of CEL Australia, said the sale of 420 St Kilda Road will allow CEL Australia to redeploy funds into our current development projects in Melbourne and Perth in order to seek higher returns.
“We are also looking into new development and investment opportunities across key Australian cities.”
The 420 St Kilda Road property has come to the market after the recent sale of 5 Queens Road in late 2016, by Charter Hall’s Office Trust. The sale, also brokered by CBRE, represented a passing yield of 5.64% and capital value of $6,665/sqm.