Sullivan’s solar makeover drives new leases

19 May 2023

Melbourne investor Brendan Sullivan has attracted three new tenants to his Mulgrave office building following the installation of solar panels which have dramatically reduced energy costs.

Mr Sullivan said the $110,000, 100 kilowatt, system had ultimately been the key to getting the new deals across the line driving numerous enquiries for the tenancies within months of completing a contemporary makeover which included the new roof top solar system.

He said the new system had reduced energy costs to tenants by 40 to 60 per cent.

“It’s been a long time coming but tenants are now fully on board with the belief that solar can achieve significant power cost reductions for their business.

“That is something all of their accountants want to hear, but it’s also about social responsibility and, dare I say, saving the planet and so while bottom line cost reductions are very attractive to tenants so too are socially responsible policies that attract and, hopefully, retain staff at a time when there are serious staff shortages right across the spectrum,’’ Mr Sullivan said.

The new tenants, which include bridal wear firm KYHA Studios, real estate services company Simple Industrial Commercial, and home and community support services firm Just Better Care, have all signed five year leases with options on areas of 250 to 1200 square metres at rentals of circa $270 to $300 a square metre.

Mr Sullivan said the tenants were also impressed with the `signature Sullivan style’ open-plan New York style hipster offices which had made their mark in locations such as Flinders Lane and Cremorne/Richmond in recent years but had, hitherto, not been seen in Mulgrave.

“Solar wasn’t the only consideration but any building owner looking to achieve solid returns on their investments would do well to do the maths on what an energy saving acquisition can add to the bottom line. Certainly tenants are voting with their feet in that regard and that cannot be ignored,’’ Mr Sullivan said.

Mr Sullivan took the gamble to purchase the so-called East Building, and its sister building the West Building next door, at 327-333 Police Road, in 2014 for $8.65 million with a maximum of only 75 per cent of the space having been leased in the 22 years since completion in 1993.

His vision and confidence in the acquisition of the buildings, their floorplans, architecture and location, has now been vindicated with current annual returns now totalling more than $1.4 million putting their book value at more than $25 million.  

“It was a real challenge but ultimately the answer was relatively simple in providing tenants with the latest technology, fit-out and ambience, and solar, these days, is really a no-brainer,’’ Mr Sullivan said.

The new leasing deals were negotiated by Ellie Scala from Knight Frank, Ash Dean and John Howell from Colliers International, and Gianni Macdonald from CBRE.