Melbourne CBD office building with unrepeatable permit for a world-class luxury project hits the market
63 Exhibition Street comes to market as appetite for east end CBD commercial assets far exceed the supply of opportunities
MELBOURNE, 09 December 2020 – As pent-up buyer demand reaches fever pitch following Victoria’s extended shutdown period, a major east end commercial office building with an unrepeatable luxury permit approval is being offered to the market as part of an international sales process.
63 Exhibition Street was recently approved in May this year for one of the City’s most striking and high-end developments, featuring a plot ratio of 33:1 – a feat that is no longer achievable under existing planning controls. Designed by renowned architects, Bates Smart, the 52-level mixed use tower comprises a diverse mix of high-end residential accommodation as well as a 6-star hotel to service the chronically undersupplied east end market.
Situated on a prominent East End landholding with frontages to Exhibition Street, Strachan and Chester Lanes, the property is located within Australia’s most prominent CBD junction of Collins and Exhibition Streets, in the company of Dexus’ 80 Collins Street and the recently approved 60 Collins Street office development, 101 Collins Street, and AMP’s Collins Place.
The property is owned by Salta Properties, who are focusing on their broader industrial and office development pipeline, and have exclusively appointed JLL’s Josh Rutman, Nick Rathgeber, Leigh Melbourne, Piers Jalland and Peter Harper to manage the transaction.
JLL’s Head of Middle Markets and Metropolitan Investments- (VIC), Josh Rutman said, “The eastern core of Melbourne’s CBD has long been a recession-proof pocket of the city which, regardless of market cycles, continues to attract some of the world’s most prolific investors and developers. Opportunities for high density development in this tightly held pocket have been minimal in recent years due purely to the lack of remaining, unencumbered development sites available for purchase.”
Formerly known as Citicorp House, the property is improved with an existing and highly distinctive 13-level commercial office building, which was constructed in 1969 and extensively refurbished in 2003. The building totals 6,135 sqm of Net Lettable Area and is currently 74% leased providing a strong initial income stream for the future owner.
“The ability to refurbish the existing office building and drive significant rental growth reversion, complemented by the brand new development permit, are highly attractive and flexible features in today’s market,” commented Executive Director, Nick Rathgeber, “particularly when the existing improvements alone present a strong investment proposition in the eastern core for any discerning investor.”
In line with some of the most successful luxury residential towers in Spring Street and surrounding areas, the upper levels of the new development will incorporate some of Melbourne’s most high-end full floor residential apartments, which with the eastern core’s being the highest geographical point of the CBD, will give the 209 metre tall development outstanding views across the Yarra River and Royal Botanic Gardens.
The high-end residential market has shown significant resilience during the pandemic and is poised to emerge from the pandemic relatively unscathed because of strong underlying demand, experts say.
63 Exhibition is situated at the heart of the pre-eminent hotel precinct of the Melbourne CBD, serviced by ‘Paris-End’ Collins Street retailing and amenities, premiere entertainment, exceptional connectivity, and access to leading sporting venues and events such as the MCG and the Australian Open.
It is anticipated that well located hotel accommodation will see substantial growth as corporate travel, tourism and visitation numbers normalise over the next 24-36 months.
JLL’s Managing Director - Hotels and Hospitality Group, Peter Harper, said, “The current level of hotel investment and development activity is a clear indicator of just how highly regarded Melbourne is by the global community. Hotel operators from around the world will be attracted to this opportunity as the east end market is nigh on impossible to gain a significant presence.”
“We anticipate that 63 Exhibition Street will draw global interest from many of the larger global mixed-use developers for what could be one of modern Melbourne’s most iconic towers for generations to come,” Mr Rutman said.
As a sign of the depth of buyer interest and nature of aggressive capital seeking a foothold in the Eastern Core of the CBD, Dexus’ $1.476 billion acquisition of 80 Collins Street and $210 million acquisition of 52 & 60 Collins Street made a very bold statement about the institution’s intentions. Other major recent transactions include Anton Capital’s $112.5 million acquisition of 85 Spring Street, and the nearby heritage 4-storey Louis Vuitton building to a Singaporean investor for reportedly $65 million, well in excess of initial expectations of around $50 million.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $18.0 billion in 2019, operations in over 80 countries and a global workforce of over 92,000 as of September 30, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.