Investment continues in Forest Hill with $45.85 million office sale
An adjoining owner has snapped up a significant office property in Forest Hill for $45.85 million as demand for commercial assets in metropolitan Melbourne continues.
Colliers International’s Rob Joyes, Peter Bremner and Rachael Clohesy have negotiated the sale of 347-351 Burwood Highway in Forest Hill on behalf of a long-term Sydney based private investor.
The 2.62 hectare Commercial 1-zoned site, which is home to two office buildings with a combined net lettable area of approximately 10,692 square metres, changed hands on a passing yield of circa 4%. The property was purchased from an offshore investor.
“This purchase also represents the largest metropolitan office investment to transact so far in 2019,” Bremner said.
The property was approximately 70% occupied at the time of sale with a weighted average lease expiry of approximately 3.4 years.
“Over the past two years, over $180 million of office investments have transacted within the Tally Ho Business Park precinct,” Joyes said.
“Office investors are taking a long-term view of the Outer East market with a particular interest in land with existing Zoning flexibility and are anticipating land values will increase significantly in the years to come off the back of State Government investment such as the Suburban Rail Loop and Vicinity’s transformation of The Glen shopping precinct.”
The Outer East office market has bounced back after a period of high vacancy, Colliers International said.
Its latest Metro Office Research & Forecast Report states that vacancy is currently at 8.74% in the Outer East, which is below the long-term average of 9.56%.
“Due to the tightening of vacancy in the City Fringe and Inner East markets, tenants view the Outer East as a more affordable option,” Joyes said.
Significant recent sales within the precinct include:
- VicRoads, 12 Lakeside Drive, Burwood East - $25.5 million
- Hewlett Packard, 353 Burwood Highway, Forest Hill - $88 million
- CFA, 16 Lakeside Drive, Burwood East - $9.6 million
- CFA, 8 Lakeside Drive, Burwood East - $18.08 million