“We’ve purchased the site. We saw significant value in the asset due to its land size and strong tenancy profile,” he said.
We’ve been blown away by the support the market has been giving us.
“Whilst we acquired it on the basis of a passive hold, we are, however, in the very early stages of design on a potential mixed-use development that will incorporate a five-star hotel, a world-class rooftop hospitality venue and ground-floor retail.”
The off-market transaction was negotiated by Colliers Australia’s Ted Dwyer and Alex Brown.
The furniture store’s sale is a striking example of how the former working-class suburb has risen to become the city’s hippest, tech-centred fringe office market.
The vendor purchased the property for $8 million in 2014 just as an influx of corporates gave rise to rapid growth in land values, record low vacancy rates, falling incentives and rising rents.
“There’s a lively demand in Richmond and Cremorne for landholdings,” Mr Brown said.
“It was a good opportunity. The vendor was the beneficiary of strong inner-city demand.”
Goldfield’s other trophy Melbourne project is a stand-alone office 800 metres down the road in South Yarra.
There the group has appointed Icon to construct a 24-level A-grade office tower at 627 Chapel Street, due for completion in October 2021.
The group’s bold $300-million commercial tower is sandwiched between Larry Kestelman’s luxury $700-million Capitol Grand apartment complex and the Olsen Hotel on Chapel Street, directly opposite the palatial Como complex.
Mr Thompson said Goldfields had non-binding “heads of agreement” with tenants covering approximately 12,000 square metres of floor space in the new building.
“We’ve been blown away by the support the market has been giving us on that [project]. We’re expecting to put pen to paper by end of first quarter next year on 40 to 50 per cent of the building,” he said.
The city-style tower will feature five-star end-of-trip facilities and large 900- to 1250-square-metre floorplates. It has seen strong interest from tenants in St Kilda Road and nearby Cremorne, Mr Thompson said.
An office revival across Melbourne’s city-fringe is likely to see more than a dozen new projects deliver well over 100,000 square metres of space in a sweeping arc from North Melbourne to Port Melbourne.
The well-documented boost to supply – driven by tenant demand and a shortage of existing office space – is expected to propel both office and land values further.
The 587-593 Church Street deal follows investment firm Bayley Stuart Capital last week paying $50 million in a fund-through transaction to take control of a tower at 1-11 Gordon Street developed by the CostaFox partnership of fruit and vegetable king Robert Costa and developer Michael Fox.
Another notable demonstration of Cremorne’s rise is blue-chip corporate BHP’s speculated move from its current headquarters at 171 Collins Street to Alfasi Property’s under-construction tower at 510 Church Street, a seismic shift that would upend traditional corporate expectations of Melbourne’s fringe office sector.
Property Editor at The Age and BusinessDay journalist for Fairfax’s theage.com.au, smh.com.au, watoday.com.au and brisbanetimes.com.au.