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Despite reports of falling property prices in Melbourne, a competitive sales campaign recently completed for two neighbouring CBD buildings reflects strong fundamentals according to an agent at CBRE.
The two properties at the junction of of the legal precinct and the city's retail core were owned for 40 years by the Lewenberg family.
CBRE's Josh Rutman says while there were several offers put forward for the properties individually, the successful offer was from a developer for the combined holding.
He says the sale price reflects an approximate square metre rate of $35,000 - a record for the precinct.
"This transaction highlights that buyers are taking a longer-term view on the Melbourne CBD market, and whilst there are some clear challenges at present for high density development, the fundamentals remain strong when you consider the growth in daily population, office vacancy rates and tourism growth," says Rutman.
"Private and institutional developers continue to seek CBD sites, particularly those capable of amalgamation into a larger land holding that would be better suited for the current planning regime.
"Demonstrating this, a number of major developers have all made substantial land acquisitions in the past 12 months with a view of delivering major office and mixed-use towers."
The larger of the two properties at 288 Queen Street is a prominent, six-level corner building, comprising several ground floor retail shops, first level office space and upper level residential accommodation, including a double-storey penthouse apartment with a large terrace and sweeping views across the city.
The second asset is the neighbouring 328 Little Lonsdale Street, which was formerly the headquarters of Arnold Bloch Leibler solicitors.
Rutman and his colleagues Mark Wizel, Lewis Tong and Alex Brierley managed the sale campaign via international expressions of interest.
Alex Lewenberg says the time came for the family to move on and that they "couldn't be more pleased with the result achieved" and wish the new owners well.
" We have been office workers, residents, shoppers and landlords in these buildings for many years, and it is wonderful to see how far the city has come since we first arrived," says Lewenberg.
Over the past 12 months, there has been a significant level of sales activity within Melbourne's western precinct, with 20 freehold commercial transactions, including 277 William Street for $93.88 million and 601 Bourke Street for $72.3 million, both to international investors.
Agent Mark Wizel says the recent level of activity highlights the market's resilience and the sustained appetite from international investors.
"Several long-term CBD owners are reviewing their portfolios, especially those that are dealing with challenges such as land tax hikes and generational changes within their own families," he says.
"Prices still remain at all-time highs and this has presented a significant opportunity for those that are considering the disposal of their holdings in the first quarter of 2019."
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