Melbourne's office sector continues to burn brightly against a background of uncertainty, with property investment group Collective Capital purchasing significant Frankston asset for about $20 million.

Situated on the corner of Wells Street, adjacent to the headquarters for South East Water, 454-472 Nepean Highway comprises a five-level, 6254 square metre (NLA) building with ground-floor retail on a 2501 square metre site with three street frontages and parking for 142 cars. 

The deal was negotiated by Mark Wizel and Josh Rutman from CBRE.

At a glance:

• A significant office asset at 454-472 Nepean Highway, Frankston has been sold off-market to property investment firm Collective Capital for circa $20 million. 
• The property comprises a five-level, 6254 square metre (NLA) building with ground-floor retail on a 2501 square metre site with three street frontages and parking for 142 cars.
• The deal was negotiated by Mark Wizel, Josh Rutman, Scott Orchard and Scott Hawthorne.

Mr Wizel said the sale result reflected the property’s "quintessentially defensive" tenancy profile, a characteristic which had become highly sought after as forecasted challenges around the office tenant market continue to gain momentum. 

"This was an astute purchase which delivered a very satisfying level of income security at a time when income security is at a premium across all types of investment classes," he said.

"Interest in this and other defensive income properties, especially non-discretionary retail, has risen markedly in recent times and should continue to escalate whilst uncertainty remains."

The latest deal comes less than a month after Australian funds management firm AVARI Capital Partners acquired a West Melbourne office building for $38.5 million - a sale also negotiated by CBRE.

Mr Rutman said investors were also responding to the growing trend of a decentralised workforce where office workers preferred to work either at or closer to home to reduce travel times without compromising productivity.

"Investors are seeking out opportunities where they can reposition buildings to cater for these changing worker needs in strategic locations which will be able to service a specific tenant catchment or industry," he said.

"This building, and others like it, are well placed to come through the current crisis in good shape."

"While there is little doubt that risk is being assessed more prudently at present, Melbourne’s celebrated white-collar tenancy diversity is a positive in driving medium to longer-term confidence in the market."

Source: CBRE

Collective Capital Director, Nicholas Thompson who founded the organization together with Dale O’Dwyer, said he was delighted with the transaction and confident about the strong returns that it would provide to investors. 

"The asset was strategically targeted due to its very strong government and government-funded tenancy profile, which, during these uncertain times, will provide our investors with a high level of income security,’’ he said.

CBRE’s Head of Suburban Office Leasing, Gianni Macdonald, said whilst lease transactions had slowed, Melbourne’s metropolitan office market had seen a significant increase in enquiry from government tenants looking for fitted tenancies close to train stations.

"Buildings that are easily accessible by public transport and have tenancies ready to go are seen as a `no-risk’ solution for occupiers looking for new office space,’’ he said.

"This building’s highway location within walking distance of Frankston Railway Station and Bayside Shopping Centre had been a major factor in attracting tenants including NDIA, St Lawrence and Wise Employment."

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