‘Fork in the road’: Owner-occupiers snap up offices while investors sit on hands

JLL’s Tim Carr, who did the Trenerry Crescent deal with Josh Rutman, Nick Peden, MingXuan Li and Vinci Carbone’s Frank Vinci and Joseph Carbone, said cashed-up owner-occupiers are keen to build their assets and brand recognition.

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“The private family market traditionally outbids other groups, but they’re being more conservative at the moment. Owner-occupiers can finally penetrate without as much competition from the rest of the market,” Carr said.

Gorman Allard Shelton’s Peter Bremner, who negotiated the Kew deal with Tom Maule, Jonathan McCormack and Vinci Carbone, said: “It’s been an incredibly lean year”. He is “unashamedly” pitching a building at 15 Gough Street, Cremorne, to owner-occupiers keen on the look of heritage buildings.

The historic site, once Craig Kimberley’s Just Jeans headquarters, has been rented to Barrett Burston Malting for almost 25 years. The lease expires next April, with no further options.

Last year, the property was for sale at about $10 million, but the price guide has now come down to around $7.75 million.

Breaking the owner-occupier trend is the recent $11.6 million sale of 11 Newton Street, Cremorne – purchased by a Sydney investor on a yield of 4.7 per cent.

While fully occupied, the 1494-square-metre, three-story building has leases expiring in 2024-25. It returns $547,402 a year and is on a generous 1063 sq m of Commercial 2-zoned land, making it a land-banking opportunity in the busy “Silicon Yarra” precinct. That deal was done by Dawkins Occhiuto, which also handled listed Brisbane investor Garda’s property disposals during the year.

“We did have lots of owner-occupiers look at the building but, given it was 100 per cent leased and only part of it was coming up for renewal next year, it didn’t really suit many people,” said Dawkins Occhiuto’s Andrew Dawkins.

Investors looking for a bargain are still in the market.

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Garda sold a Box Hill office building at 436 Elgar Road earlier this year for $40.3 million, a 14 per cent discount to its book value. Records show the property was sold to another institutional investor – believed to be Barwon Investment Partners’ healthcare fund.

The big investors who are too nervous to put investment-grade property on the market are watching with keen interest to see what prices Garda can achieve for its two buildings in the Botanicca business park in Burnley. They are understood to be in due diligence with an investor.

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