PRIME SITE COULD REAP TELSTRA $100M

TELSTRA is cashing in on the buoyant Melbourne property market with plans to sell a massive landholding on the CBD's upmarket eastern fringe in a deal that could be worth about $100 million.

The property, which forms part of Telstra's Exhibition Telephone Exchange, was previously earmarked by Telstra for a $950 million office tower development.

However, that proposal, which aimed to consolidate Telstra's Melbourne office space into single premises, was abandoned following the departure of former CEO David Thodey and the appointment of Andy Penn as his replacement in February.

Telstra plans to place the property, located at 308 Exhibition Street, on the market in January.

The prime corner site, totalling 4164sqm and overlooking the Carlton Gardens, spans almost an entire city block and has frontage to La Trobe Street.

Commercial agency CBRE has been appointed to market the ageing property, which was originally constructed for Telecom in 1982 and is ripe for redevelopment.

"While a number of active offshore Asian developers have made their mark on the Melbourne skyline, a number of larger players have been waiting for an opportunity of this profile for many years," says CBRE senior director Mark Wizel.

"We expect sophisticated offshore developers, both private and publically listed, to show strong interest in the site, with a view to potentially hold the finished asset for generations to come."

Wizel expects the site could accommodate a major mixed-use development, including a possible six-star hotel.

"This particular pocket of the city has been starved of quality built form outcomes for years and the future buyer has the opportunity to potentially redefine the north-eastern gateway to the Melbourne CBD," he says.

CBRE senior associate director Josh Rutman forecasts the property will create 'the strongest and most competitive sales campaign in Melbourne for 2016'.

"This site has the potential to be a pivotal part of Melbourne's future," he says.

"It has been a very long time since the market has seen an opportunity of this scale and quality.

"Securing a footprint of this magnitude in a premium CBD location will be of particular interest to offshore developers, with the site offering multiple development options beyond a standard office or residential tower in isolation.

"Being positioned immediately opposite the Carlton Gardens will be a key selling factor, enhancing its appeal with a broad range of groups, including six-star hotel operators."