Melbourne’s Wealthiest Family Takes a Hit on City Fringe Office Tower
One of Australia’s most prominent families, the Libermans of Melbourne, has absorbed a significant $20 million loss on the sale of their city fringe office building in Collingwood. The 12-storey property at 54 Wellington Street, which was intended to be a lucrative investment, ultimately cost the family’s investment vehicle, Impact Investment Fund, more than $130 million to complete, only to be sold for approximately $110 million.
The development of the tower, which began in the early 2020s, was severely hampered by the collapse of two major construction firms. The initial builder, Daniel Grollo’s Grocon group, went into liquidation mid-project. Its successor, Probuild, which stepped in to salvage the development, also subsequently collapsed. These setbacks led to substantial delays and escalated construction costs, significantly impacting the project’s final outlay.
The Liberman family has had to discount the tower’s asking price multiple times. In 2022, following its completion, they attempted to sell it for $160 million, but the sale did not materialise. By last year, the price had been reduced to $130 million. The ultimate sale at $110 million represents a $20 million markdown from the initial asking price after completion, and a substantial loss when compared to the total investment. The family reportedly had to secure additional financing to see the project through to completion, further compounding their financial exposure.
The tower was originally conceived by Grocon on the site of a former Telstra exchange. The recent acquisition was made by Sydney-based ASA Real Estate Partners, who are reportedly informing their investors of what is considered a significant bargain purchase. The deal was facilitated by a team of agents including Cushman & Wakefield’s Leigh Melbourne, Nick Rathgeber, and Daniel Wolman, alongside JLL’s Piper Dedrick.
Footscray Office Building Re-enters Market
Adding to the property news, a building previously owned by Impact Investment Group, the former headquarters of Lonely Planet in Footscray, has once again been listed for sale. Planum Partners, a Sydney-based firm, acquired the 6562-square-metre building in 2019 for $33.1 million. They are now aiming to achieve a sale price exceeding $30 million.
However, the current office market landscape presents a starkly different environment compared to when these properties last changed hands. Increased vacancy rates and declining capital values have fundamentally reshaped the sector, making it more challenging for vendors to achieve their desired returns. The listing for this Footscray property is being handled by Cushman & Wakefield agents Daniel Wolman, Oliver Hay, and Leon Ma.
Armadale Fashion Retail Space Fetches Strong Price
In a more positive retail property transaction, a shop on High Street, Armadale, leased to the fashion label Henne owned by Nadia Bartel, sold for $4.65 million after a spirited auction. The auction, held on a Thursday, saw 468 bids placed over two hours, commencing in sunshine and concluding in the rain.
The bidding for the property at 1008 High Street began at $3.5 million. It was officially declared “on the market” at $4 million, after which five interested parties, including Henne’s owners, engaged in a prolonged bidding war. The property currently generates $190,000 per year in rent under a new five-year lease, resulting in a tight yield of 3.7 per cent for the buyer. The sale was managed by Teska Carson agents Matthew Feld and Michael Ludski. The successful purchaser is a local Armadale investor. Records indicate the vendors had held ownership of the 200-square-metre shop for at least five decades.
Camberwell Junction Retail Property Passes In
Not all retail property auctions were as successful. Marcus Price, former CEO of PEXA, was unable to secure a buyer for his shop in Camberwell Junction, which passed in at $6.2 million. Only a handful of bids were made by two potential buyers for the property located at 751-753 Burke Road. Price had originally purchased the Mountford Shoes store for $7.55 million in 2021. The store currently has a renewed lease and contributes $315,000 annually in rent. Fitzroys agents David Bourke, Chris James, and Ben Liu were responsible for conducting the auction.
Other Notable Property Transactions
In other recent sales, the office of legal firm Galbally & O’Bryan at 259 William Street, which initially passed in at $5 million with only two bidders, has now sold for approximately $5 million. Cushman & Wakefield agents Oliver Hay, Anthony Kirwan, Daniel Wolman, and Leon Ma negotiated the post-auction sale.
An Amcal pharmacy at 1045 Point Nepean Road, Rosebud, demonstrated the importance of multiple bidders, selling for $2.14 million with four parties actively participating. Fitzroys agents Tom Fisher and David Bourke managed this auction.
Looking ahead, the Blatt family is set to sell a collection of shops at 456-460 Toorak Road next month, after holding them for over 50 years. These shops, spanning 287 square metres and leased to beauty operators, are expected to fetch more than $4 million. Fitzroys agents Mark Talbot and Lewis Waddell are handling the sale.
Villawood’s Supermarket Investment Opportunity
The commercial division of residential developer Villawood is marketing a Coles supermarket located within the Botanic Ridge housing estate in Cranbourne. Sandhurst Retail & Logistics is anticipating a sale price of around $70 million for the 10,455-square-metre centre, which was completed in 2022.
The centre boasts a diverse tenant mix, including a Dan Murphy’s liquor store, a BlueFit Swim school, and various other food and beverage outlets. Situated on a substantial 32,449-square-metre parcel of land, the centre generates an annual rental income of $3.75 million. The anchor tenant, Coles, has a new 12-year lease in place. The marketing campaign is being led by Colliers agents Tim McIntosh, Will Heffernan, and James Wilson, in conjunction with Stonebridge Property Group’s Justin Dowers and Kevin Tong.
Separately, the St Kilda Aldi supermarket is also on the market, with expectations of achieving approximately $10 million. This 1449-square-metre supermarket, located at 133-135 Inkerman Street, benefits from a new 12-year lease and currently returns $555,000 in annual rent. JLL agents Stuart Taylor and Tom Noonan are managing the listing.
Groundbreaking Developments Underway
Despite the challenges faced by some sectors of the construction industry, several significant projects are forging ahead. Sterling Global has appointed Hacer Group to undertake its ambitious $610 million mixed-use development at 623 Collins Street, on the western corner of Spencer Street.
This 42-storey tower will artfully integrate the historic 1924 State Savings Bank of Victoria banking chamber and the Batman’s Hill Hotel into a contemporary residential, commercial, and retail complex. The project, designed by Architect Plus Studio, will comprise 320 residential units, alongside 2700 square metres of office space and 900 square metres of retail. Sterling Global acquired the site from pub magnate Bruce Mathieson in 2023 for $55 million.
In a separate venture, a joint collaboration between builder Hickory and financier MaxCap has commenced construction on a substantial 892-bed student accommodation project, which will be managed by UniLodge. This 26-level tower, situated on the former Great Western Hotel site at 570 Little Bourke Street, has been designed by Nettletontribe and is slated for completion in time for the 2028 academic year. MaxCap and Hickory collectively purchased various components of the site between 2019 and 2022, for a combined sum of $51.33 million. This marks Hickory’s fourth student accommodation project and their second major development within the CBD.
Hickory is also re-evaluating the development plans for the former Kilkenny Inn site at 580 Lonsdale Street. While they secured a permit for a 21-storey office building in 2021, they submitted an application late last year to significantly increase the height to 48 storeys, accommodating 467 apartments.
Moving to the suburbs, Riverlee is commencing construction on a $100 million medical building as part of its expansive $2 billion New Epping development. Riverlee purchased the former Epping quarry, a 51-hectare site, in 2015. The site was rezoned from industrial to mixed-use in 2020 and is strategically located near the Epping Wholesale Market, the Pacific Epping shopping centre, and the Northpoint Business Park. Kane Constructions is the builder for the six-storey, 8200-square-metre medical facility, which will feature direct connectivity to Ramsay Health Care’s recently opened $133 million Northern Private Hospital. Further construction is anticipated to begin shortly on a new commercial strata office building, and a Punt Hill apartment hotel is expected to be completed by the end of this year.
