CBRE Global Investors is the latest buyer to make a splash in Australia’s east coast office market, purchasing a B-grade Melbourne tower for $250 million.
CBRE’s independently operated investment management firm would not disclose the buyer it purchased the property on behalf of, but BusinessDay confirmed 120 Spencer Street was transacted for more than $250 million.
The deals reveals the strong performance of Australia’s office sector where bumper returns have buoyed office landlords, prompting one of Australia’s largest – Dexus boss Darren Steinberg – to declare last week that commercial property values would keep rising and Sydney’s high-flying office market would continue to outperform for another two years.
Global Investors snapped up the 23-storey office opposite Melbourne’s Southern Cross Station from Sydney-based Anton Capital, who held the property for little more than a year.
Anton Capital, steered by Tony Martin and Anthony Kingsley, would not comment when contacted by BusinessDay.
Anton settled on the grey concrete building in April 2016 following a $165.2 million deal with Melbourne soft drink and property magnate Harry Stamoulis.
Monash University subsidiary, Monash College, is the latest tenant to take space in the building, signing a 6000-square-metre leasing deal.
Other tenants include the Administrative Appeals Tribunal and Sage Institute of Education.
The Spencer Street deal is the latest in a string of east coast office plays.
Fund manager Charter Hall’s Direct Office Fund last month reportedly offloaded a North Sydney office tower – the headquarters of Sony Australia – to Jet Technologies founder Albert Malki for about $60 million.
And US financial services giant TIAA’s TH Real Estate is believed to be about to test the market’s interest in its 20 Hunter Street tower in Sydney.
The 16-level tower was the American giant’s first Australian purchase and is expected to fetch about $170 million.
Strong fundamentals in both Sydney and Melbourne, where vacancy rates are at historic lows and tenant demand is rising, are contributing to tighter yields and rising values.
Recent Property Council of Australia figures put Sydney’s office vacancy rate at 5.9 per cent, continuing the city’s run as the lowest in the country. Melbourne’s vacancy stayed steady at 6.5 per cent.
Parts of Singapore-based fund manager TrustCapital Advisors’ $1 billion Australian portfolio are also up for grabs and generating interest among institutional investors.
The group is offloading five key buildings in Sydney, Melbourne and Brisbane, adding close to $500 million to the east coast’s office deal-making frenzy.
CBRE Global Investors manages transactions on behalf of other investors.
Its most recent Australian purchase was for South Wharf Tower, an A-grade Melbourne office sold by German property fund Deka-ImmobilienGlobal.
The deal in 2016 was struck on behalf of another German fund, Bayerische Versorgungskammer, who purchased the tower for $150 million.