Macquarie-backed build-to-rent specialist Local: Residential has secured a prime inner-city South Melbourne site, pushing ahead with a $370 million rental apartment development as institutional investment in Melbourne housing accelerates.
As reported by the Australian Financial Review, the project will deliver 355 purpose-built rental apartments at 15–37 Bank Street, a short walk from St Kilda Road. Local is partnering with a fund managed by Macquarie Asset Management Real Estate, reinforcing the group’s position as one of Australia’s largest and most active build-to-rent developers.
Once completed, the South Melbourne project will add to Local’s $2.5 billion residential pipeline in Melbourne and form part of a national development program valued at $3.25 billion, representing roughly 4000 rental homes across major urban markets.
The Bank Street development will include a mix of studio, one-, two- and three-bedroom apartments, with 10 per cent allocated to affordable housing. Residents will have access to co-working areas, a gym, wellness facilities, a heated swimming pool and a rooftop terrace, amenities designed to differentiate the scheme from traditional private rental stock.
Local co-chief executive Dan McLennan said the site’s proximity to the Anzac Metro Station, the Royal Botanic Gardens and Albert Park Lake made it particularly attractive for long-term renters seeking lifestyle and connectivity close to the CBD fringe.
“We want to provide a product that is clearly superior to the private rental market, while still being attainable,” McLennan said. “Irrespective of planning obligations, we always include non-market housing for people who would otherwise be excluded.”
The South Melbourne acquisition was brokered by CBRE agents Trent Hobart, David Minty, Andrew Purdon and Alex Shaw. The site was purchased from US-based developer Hines, which had previously earmarked it for a large-scale build-to-rent portfolio alongside Canada’s Cadillac Fairview.
The new project follows Local’s second South Melbourne development at 245 Normanby Road, due for completion this year, and its recent appointment by the Victorian government to deliver about 350 rental apartments at the Fitzroy Gasworks precinct, including more than 100 affordable homes.
Melbourne continues to attract significant build-to-rent investment due to comparatively lower land costs and strong rental demand. Recent commitments include Lendlease’s $500 million Docklands tower backed by Japan’s Tokyo Tatemono, and a separate $600 million Docklands project involving Marubeni, Haseko and Mizuho Leasing.
Despite rising activity, Local believes the sector remains far from saturation. “Build-to-rent is still a relatively small proportion of the overall rental market,” McLennan said. “Our projects are leasing strongly, and we think there’s still a long runway for growth.”
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