The COVID19 pandemic has caused troubled retailer, Flight Centre, to sell its Melbourne Headquarters on St Kilda Rd to raise capital to supports its business.
The Flight Centre Group acquired the building in 2008 for $32m and has been able to sell the building for $62.15m to Shakespeare Property Group. Settlement of the sale will occur in July 2020.
The 11 storey building has approximately 7,524sqm of NLA and sits on a 2,317sqm site opposite Fawkner Park. Flight Centre will lease back approximately 75% of the space. Other tenants include Flight Centre subsidiary Corporate Traveller, specialist travel agency Stage & Screen Travel and state soccer body Football Victoria. One floor is vacant and available for rent.
Shakespeare Property Group have been out of the market since 2016 when it acquired two Adelaide office towers for just under $68 million.
The Group also owns the Novotel Twin Waters Resort on the Sunshine Coast, the Pullman Cairns International hotel, 295 Little Collins Street Melbourne and is involved in a range of other development projects.
The St Kilda Rd strip has seen several large deals over the last 12 months including the acquisition by SC Capital of 412 St Kilda Rd for $104m and 574 St Kilda Rd which sold for $58m and in June last year, Runjiang Investment Group paid $163m for 509 St Kilda Rd.
According to Knight Frank's March 2020 Report, office vacancy in the St Kilda Road precinct currently sits at 8.7% having risen marginally over the last 12 months (8.3% Jan 2019). The minor uplift in vacancy has in part been triggered by 12 months of negative net absorption (-13,504), with the rise in vacant space driven by a spate of tenants vacating their premises. In moving to Malvern Road, Tandem Corp vacated 1,800 sq m of office space at 417 St Kilda Road, and Ascender will soon vacate 484 St Kilda Road to move to 35 City Road at Southbank. Despite the vacancy, rents along St Kilda Road are up by 8.4% to now sit at $450/sqm nett.
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