Wealthy individuals are expected to continue to drive a resurgence in Melbourne's suburban office sector, snapping up two buildings so far this year and outbidding institutional investors on key assets under $40 million.
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A landmark three-level office built in 1888 as the Surrey Family Hotel at 613 Canterbury Road sold for $4.5 million to a local private investor.
Fitzroys' Michael Ryan and James Lockwood said the property, divested from a large family portfolio, had 37 parking spaces and generated income of $250,000 per annum plus GST fully leased.
Tenants include Harmon Partners and Professional Association Management Services.
In nearby blue chip Hawthorn, at 8 Yarra Street, a 981-square-metre stand-alone office leased to Financial Freedom Institute on a five-year annual rental of $123,735 (with fixed 4 per cent increases) was sold by agents Gray Johnson and Teska Carson for $3.55 million.
Gray Johnson director Matt Hoath said the building was purchased by an investor with an eye to development, given its proximity to some of the suburb's best residential streets.
Suburban office sales topped $709 million last year, almost double the previous period, CBRE's Justin Clarkson said.
There were 28 transactions above $5 million last year, including four sales over $40 million.
"Groups with metropolitan funds have been actively circling for suburban opportunities, among them Centuria, GPT, 360 Capital and Eureka. However, these institutional investors had been largely outbid by private investors, particularly in the sub-$40 million price bracket," he said.
That was highlighted by the $96.75 million sale of the Bennelong Property Group portfolio, with all three assets acquired by separate private buyers.
Yields in the inner east firmed 44 basis points over the past year and 107 points over two years, he said.
