Building in Dandenong, Victoria sells under tough market conditions

MELBOURNE, February 15 2022 – A fully leased office building positioned within the Central Dandenong Activity precinct has exchanged unconditionally for $14 million to a private family office despite the majority of the sale campaign being run through Melbourne’s lockdown period.

JLL’s Executive Director of Capital Markets- (Victoria), Josh Rutman, Executive Tim Carr and Associate MingXuan Li sold the asset at 40-42 Scott Street, Dandenong via an Expressions-Of-Interest campaign for $14,000,000 on a sharp building rate of $5,374 per sqm.

Mr Carr said, “Despite buyers’ wavering in confidence about the future viability of the commercial precinct in Dandenong, the JLL team worked hard to articulate the strength of the tenant covenant and fixed growth attributable to the investment offering that was one of very few available on the open market.”

Mr Carr said, “Following an exhaustive sale process that ran throughout Melbourne’s extended lockdown period where no inspections could take place, the JLL team generated numerous offers on the asset following a lengthy and all-encompassing sale process.”

“Due to the attractive interest rate environment, limited supply of quality opportunities and a noticeable surge in active requirements from investment funds and syndicates who are seeking opportunity within the Melbourne market, we expect that quality office investments will continue to trade well in 2022.”

Forming part of the $290 million Dandenong revitalisation plan, the area has undergone an extraordinary level of development over recent years, with more than 60,000 workers now operating within the precinct.

40-42 Scott Street represents one of very few fully leased freestanding office buildings being offered for sale in 2021, the building offers comprises 2,605sqm of net lettable area and a reliable income stream. The property is anchored by Macpherson Kelley Lawyers who have multiple office locations in the Melbourne CBD, NSW and QLD. 

“There is great depth and diversity of capital chasing core and value add assets and we are seeing a supply and demand imbalance between the amount of capital looking for assets and the number of assets that are available and we anticipate this to continue in 2022,” Mr Carr said.

Low interest rate environment will likely continue to encourage buyers to capitalise on opportunities prior to upcoming hikes later in the year or in 2023. We expect yields to continue to compress as we expect to see a constrained supply of quality opportunities with long lease profiles (5+ years),” Mr Carr said.