Modern Office Building Neighbouring Treasury Square Precinct Sells for $51.8M

30 November 2022

Colliers Melbourne City Sales team are proud to announce the sale of 289 Wellington Parade South, East Melbourne, for $51,785,000 to Melbourne-based commercial property investment manager – Bayley Stuart. The transaction was brokered by agents Daniel Wolman, Matt Stagg, Oliver Hay and Leon Ma on behalf of Harmony Property Investments.

The property comprises a modern five-level office building with a net lettable office area of 5,526 sqm, a rooftop terrace with city views and 58 basement car parks.

The building benefits from a strong lease profile anchored by Arthur J Gallagher & Co and government and corporate tenants. The sale represented a capital value of $9,365/sqm and a passing yield under 4.50%, which will revert to approximately 6.0% once fully leased.

289 Wellington Parade South benefits from a prestigious East Melbourne location on the doorstep of the Melbourne CBD’s East End office precinct and Spring Street State Government precinct. The property also directly neighbours the proposed Treasury Square development spanning over one hectare and comprising three new towers.

Daniel Wolman, Head of Colliers Investment Services Victoria, said, “The transaction demonstrates long-term investor confidence in high quality and well located Melbourne CBD and City Fringe office assets despite the current rising interest rate environment.”

Mr Wolman continued, “289 Wellington Parade South received strong domestic and international buyer interest because the precinct is underpinned by State Government Victoria, which has attracted major investment and development including 32 Flinders Street, Melbourne (GPT Funds Management), 30 Flinders Street (Time & Place), 21 Spring Street (Cbus Property) and 85 Spring Street (Pelligra Group).

Lloyd Ioannou of Harmony Property Investments commented, “289 is a fantastic, investment-grade asset that Harmony has proudly managed on behalf of our valued investors since 2009, delivering strong returns throughout. The fundamentals of the property remain as true today as ever, being its premium location, quality of build, consistent ability to attract and retain strong tenant covenants, not to mention the future upside upon activation of the Treasury Square precinct”.

Andrew MacGillivray, Managing Director of Bayley Stuart, said, “289 Wellington Parade South is a high-quality modern asset that was ahead of its time with environmentally sustainable design features, exclusive terraces and a rooftop space with outstanding views, and extremely attractive East Melbourne location, just moments from the CBD while in tranquil leafy surrounds. The asset is in line with our focus on flight-to-quality modern office assets in attractive CBD fringe locations.”

The Bayley Stuart portfolio comprises several brand new Melbourne fringe office buildings focused on the future of office space, including 600 Church Street and 1 Gordon Street in Melbourne’s leading tech and creative precinct of Cremorne, as well as the recently completed 10,000m2 Craftworks office building in Abbotsford which boasts a communal rooftop including expansive and fully furnished indoor and outdoor function spaces, a 90-seat cinema equipped for presentations and even a veggie garden.