Development sites presently advertised for sale offer a reflection of the current market
What are the emerging trends of 2016 in terms of property development? A strong indicator can be gained by assessing what is generally the first step in the development process: site acquisition.
The current batch of development sites listed with various selling agencies does indeed reveal/bolster the emergence of middle and outer suburban Melbourne development sites as the main market driver, where in recent years Melbourne's CBD and Southbank held sway.
A likely cause of the CBD subsiding from recent highs is the absence of premium/high profile sites available. While many of Melbourne's largest developers are yet to act upon major projects in their keep within City of Melbourne, last year's change to planning laws has also resulted in sites capable of obtaining large scale permits decreasing.
Add the proportionately high number of apartments under construction in Southbank and Melbourne's CBD, and a given vendor's ability to capitalise upon strong prices looks to have been somewhat stymied.
So with top end developers scrapping it out in areas such as the CBD, Southbank, Docklands and South Yarra , many mid-tier developers are eyeing off surrounding municipalities and outer suburbs with the intent of developing apartments, which is coinciding with an upswing in attached living preferences in those suburbs.
However, there is one CBD site that will attract much attention.
The Marquee site
Without question the highest profile site currently on offer, 308 Exhibition Street at the northern edge of Melbourne's CBD is set to be divested by Telstra in the wake of the telco's move to shy away from developing a new commercial complex onsite. Telstra's non-move will be a developer's gain, with the 4,100sqm site capable of handling multiple towers.
CBRE City Sales are parading the site which has 138 metres of frontage and is perched above Carlton Gardens. A mixed-use development looks likely with indicative renders suggesting massive dual towers as a likely outcome for 308 Exhibition Street.
Fishermans Bend movements
As development continues to take hold within Fishermans Bend, a steady flow of sites have been made available with vendors seeking top dollar in current market conditions.
Latest to list is 85-93 Lorimer Street with Little Projects hoping for top dollar from the sale of the site which comes with approval for 940 apartments. Colliers are handling the Elenberg Fraser-designed twin tower scheme.
The Lorimer Street listing follows hot on the heels of 253-273 Normanby Road, South Melbourne which shapes as a massive land banking opportunity. Incumbent Oxford Press utilises the 7,661sqm site and has the option to stay on through to the end of 2018, by which time the areas surrounding 253-273 Normanby Road will be sprouting with high-rise residential projects.
Underlining the potential of 253-273 Normanby Road are adjoining properties which banded together to submit plans for 1,500 apartments during 2015.
Spec Property continues to sell-off approved development schemes with Lemon Baxter and CBRE City Sales appointed to move 51-59 Thistlethwaite Street. After a 13 month battle to gain approval, the Fishermans Bend scheme joins SPEC's former North Melbourne site at 3-5 Shiel Street in being offered to prospective buyers.
Elsewhere and Colliers is handling 11-21 Buckhurst Street, South Melbourne which is another site earmarked for residential conversion.
Suburban sway
With over 20 current development sites listed in middle and outer Melbourne suburbs, medium-scale residential developments are proving popular. With the tightening in the availability of inner city development sites and the continued upward trajectory of apartment living in the suburbs.
This is reflected by the spread of suburbs with development sites on the market. Ringwood, Coburg, Ivanhoe, Greensborough, Doncaster East, Essendon and Glen Iris are present, with a host of other suburbs in tow.
With the majority of development sites skewed toward the eastern and northern suburbs, Savills for instance have a number of sites set for residential development. 47-49 Norman Street holds a permit for 43 apartments within ever popular Ivanhoe while 541 Sydney Road looms as a likely residential development.
Demolition of the adjoining site has begun in preparation for an 8 level apartment building, raising the likelihood of a new apartment enclave fronting Sydney Road.
There is of course an exception to the rule. Almost inexplicably 9-11 Ellingworth Parade within Box Hill has yet to find a buyer. Listed with Lindellas for an extended period of time, the property holds approval for 58 apartments, 6 offices and retail space over 12 levels.
Box Hill has been and still remains the suburban Melbourne apartment powerhouse.
A true test of the market
If ever one site shaped as a true test of developers appetite for, 135 The Esplanade on the bank of Lake Caroilne may just be that site. Caroline Springs is no stranger to apartment living, but a project of the magnitude has yet to see the light of day in the relatively new fringe suburb.
Ray White are handling the sale of the 2,237sqm land parcel which comes with approval for 101 apartments above a retail space. At seven levels it would be the suburb's tallest structure.
Should a buyer promptly snap up 135 The Esplanade it would likely indicate that there's plenty of steam in the market and much belief in the future of higher density living in fringe suburban locations.