Demand for office strata assets in Melbourne’s metro has soared during the first quarter of 2023

Demand for strata assets in Melbourne’s metro and city fringe has soared during the first quarter of 2023, as Colliers reports overall deal values across the metro strata office market increasing from $12,450,500 in Q4 2022 to $15,733,763 in Q1 2023.

Colliers agents Ben Baines and Matt Knox have secured six out of the 20 metro and city fringe office strata sales reported in Q1 2023, including Level 2, 2-4 Ross Place, South Melbourne, which a local investor snapped up for $2 million. Suite 5, 150 Chestnut Street, Cremorne, was sold for $870,000 to an owner-occupier, and a local owner occupier has purchased Suite 15, 1 Ricketts Road, Mount Waverley, for $960,000.

“Metro strata office assets continues to be in high demand, mainly driven by owner occupiers following the ongoing trend of flight to quality and decentralisation from the Melbourne CBD. It has seen businesses choosing newer office spaces positioned closer to where employees live and with a wider range of retail, hospitality and transport already established,” said Mr Knox.

In conjunction with Ian Angelico and Ryan Milivojac from CVA, three deals have transacted in 2023 to owner occupiers and investors for building rates close to $14,000 per sqm at Wilmac’s brand-new office development Cremorne House in Cremorne, which is due for completion in December 2023.

Colliers Matt Knox added, “The level of demand and activity for Cremorne House reflects the quality of the development and the lack of premium supply to purchase within the Cremorne market.”

“Cremorne keeps attracting businesses of various sizes, given its proximity to the CBD, established hospitality and retail offerings on Church and Swan Streets and multiple public transport options. Neighbouring Richmond and South Melbourne also continue to increase in popularity.”

Colliers Ben Baines adds, “With the lack of supply of new premium offerings, purchasers have for a long time been forced to buy in established buildings, but over the past 12 months, we have seen a shifting trend towards these premium grade off-the-plan strata projects located in the city fringe and metro, which have achieved rates well above $13,000 per sqm. It further strengthens the flight to quality and experience trends, as owner occupiers and investors are drawn to brand-new premium grade strata offices outside the CBD.”

“We are anticipating the strong demand to continue throughout Q2 2023, as interest rates start stabilising and owner occupiers seeking newer premises in parts of Melbourne with low levels of premium office supply,” said Mr Baines.