Wealthy family takes $20m haircut on Collingwood office

Capital Gain

One of Australia’s wealthiest families has taken a $20 million haircut on the sale of its city fringe office building, which was plagued by the collapse of two big building firms.

Impact Investment Fund, an investment vehicle owned by Melbourne’s wealthy Liberman family, sold its Collingwood office for about $110 million after spending more than $130 million to get it finished.

Bad luck plagued the construction of the 12-storey office building at 54 Wellington Street in the early 2020s.

First, Daniel Grollo’s Grocon group collapsed in mid-build, then its successor, Probuild, which took over the project, also went under, delaying the project and adding millions in extra costs.

The Libermans have twice discounted the tower. They tried to sell once it was complete in 2022 for $160 million without getting it over the line. Last year, the price was discounted to $130 million. When its construction went pear-shaped early in the pandemic, Impact took a $20 million hit after borrowing more money to get the job finished.

The tower was originally developed by Grocon on an old Telstra Exchange.

The buyer, Sydney-based ASA Real Estate Partners, is understood to have notified its investors of its bargain buy.

Cushman & Wakefield’s Leigh Melbourne, Nick Rathgeber and Daniel Wolman and JLL’s Piper Dedrick got the deal away but declined to comment.

Meanwhile, a building formerly owned by Impact Investment Group, the old Lonely Planet office in Footscray, is back on the market.

Sydney-based Planum Partners paid $33.1 million for the 6562-square-metre building in 2019, and is hoping to get more than $30 million this time around.

But the office market has changed in fundamental ways since these offices last changed hands, with vacancies rising and capital values sinking.

Cushman & Wakefield’s Wolman, Oliver Hay and Leon Ma have the listing.

Designs on Armadale fashion shop

A two-hour auction on High Street Armadale on Thursday started in bright sunshine before closing, 468 bids later, in the rain.

The $4.65 million result was far from dismal. Bidding for the shop at 1008 High Street, which is leased to Nadia Bartel’s fashion label Henne, started at $3.5 million.

It was declared on the market at $4 million, and five parties, including Henne’s owners, slowly increased the bidding.

Henne has a new year five-year lease on the shop and pays $190,000 a year, giving the sale a tight yield of 3.7 per cent.

Teska Carson’s Matthew Feld and Michael Ludski handled the auction. A local Armadale investor won the day. Records show the vendors had owned the 200-square-metre shop for at least 50 years.

No so lucky was former PEXA boss Marcus Price, whose shop in Camberwell Junction passed in for $6.2 million with a handful of bids made by two prospective buyers.

Records show Price paid $7.55 million for the Mountford Shoes store at 751-753 Burke Road back in 2021.

Mountford Shoes has a fresh lease on the building and pays $315,000 a year in rent. Fitzroys agents David Bourke, Chris James and Ben Liu ran the quick auction.

Earlier this month, the office of legal firm Galbally & O’Bryan, at 259 William Street, passed in at $5 million after attracting only two bidders.

It sold this week for about $5 million, with Cushman & Wakefield agents Oliver Hay, Anthony Kirwan, Daniel Wolman and Leon Ma negotiating the post-auction discussions.

Proving you need more than two bidders, there were four parties at the auction of an Amcal pharmacy at 1045 Point Nepean Road, Rosebud, which sold for $2.14 million. Fitzroys’ Tom Fisher and Bourke ran that auction.

Next month, the Blatt family is selling up 456-460 Toorak Road after more than 50 years.

The shops are on 287 square metres and leased to beauty operators. Fitzroys agents Mark Talbot and Lewis Waddell are expecting more than $4 million.

Villawood’s supermarket

The commercial arm of residential developer Villawood is selling a Coles supermarket in the Botanic Ridge housing estate in Cranbourne.

Sandhurst Retail & Logistics is expecting about $70 million for the 10,455-square-metre centre, which was completed in 2022.

Tenants include Dan Murphy’s, BlueFit Swim school and other food and beverage operators. The centre is on a 32,449-square-metre piece of land and returns $3.75 million a year in rent. Coles has a fresh 12-year lease.

The listing is being marketed by Colliers’ Tim McIntosh, Will Heffernan and James Wilson, with Stonebridge Property Group’s Justin Dowers and Kevin Tong.

Also on the market is the St Kilda Aldi, which is expected to fetch about $10 million. The 1449-square-metre supermarket, at 133-135 Inkerman Street, has a new 12-year lease.

It pays $555,000 in rent. JLL’s Stuart Taylor and Tom Noonan have the listing.

Breaking ground

With construction costs stalling many projects in the past few years, it’s worth noting what is going ahead in this market.

This week, Sterling Global appointed Hacer Group to build its $610 million mixed-use project at 623 Collins Street, on the western corner of Spencer Street.

The 42-storey tower will integrate the 1924 State Savings Bank of Victoria banking chamber and the Batman’s Hill Hotel into a new residential, commercial and retail building.

Architect Plus Studio has designed the 320-unit project, which will have 2700 square metres of office and 900 square metres of retail. Sterling Global paid pub boss Bruce Mathieson $55 million for the site in 2023.

Meanwhile, a joint venture between builder Hickory and financier MaxCap has started construction on a 892-bed student accommodation project, to be run by UniLodge.

The 26-level tower, on the old Great Western Hotel site at 570 Little Bourke Street, is designed by Nettletontribe and is scheduled to be completed in time for the 2028 academic year.

MaxCap and Hickory bought the site’s several components between 2019 and 2022, paying a combined $51.33 million. It’s the fourth student accommodation project for Hickory, and its second major development in the CBD.

Hickory is revising the development scheme of the old Kilkenny Inn site at 580 Lonsdale Street, where it won a permit for a 21-storey office building in 2021. Late last year it applied to double the height to 48 storeys with 467 apartments.

Out in the suburbs, Riverlee is breaking ground on a $100 million medical building at its $2 billion New Epping development.

Riverlee paid $14 million for the former Epping quarry in 2015, and the 51-hectare site was rezoned to mixed use from industrial in 2020.

The site is surrounded by the Epping Wholesale Market, the Pacific Epping shopping centre and the Northpoint Business park.

Kane Constructions is building the six-storey 8200-square-metre building, which will connect directly to Ramsay Health Care’s recently opened $133 million Northern Private Hospital.

Work is starting soon on a new commercial strata office building, and a Punt Hill apartment hotel is expected to be completed this year.

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