Australian funds management firm AVARI Capital Partners is behind the second notable commercial sale in West Melbourne in a week with the acquisition of a West Melbourne office building for $38.5 million.

The property at 355 Spencer Street is one of three held by vendors, developer Frank Palazzo, Resimax Group director Ozzie Kheir, and Probuild founder Phil Mehrten and comes with a permit for a major mixed-use development.

AVARI founder and chief investment officer Alan Liao said the acquisition was in line with the firm’s strategic focus on value-add real estate investment. 

At a glance: 

• An office building at 355 Spencer Street, West Melbourne has been sold to Australian funds management firm AVARI Capital Partners for $38.5 million.
• The office building comprises 7362 square metres spread across six levels on a prominent 2000 square metre corner site with more than 90 metres frontage. 
• The deal was brokered by CBRE's Mark Wizel, Josh Rutman, Scott Orchard and Scott Hawthorne.

"This represents a structurally sound, superbly designed and aesthetically pleasing building," he said.

"To knock it down and re-develop would not achieve its best and highest use.

"We will run an extensive refurbishment program including an internal spec fit-out, service upgrades and add end-of trip facilities.

"We will also activate the central courtyard with a cafe or small bar to provide tenants with an attractive communal space."

The office building comprises 7362 square metres spread across six levels on a prominent 2000 square metre corner site with more than 90 metres frontage. 

Source: CBRE

CBRE Director Investments, Mark Wizel, who managed the sale with Josh Rutman, Scott Orchard and Scott Hawthorne, said the outcome had been very pleasing for both the purchaser and vendors.

"In its decision to on-sell the portfolio the vendors have presented some very attractive assets to an obviously hungry market as enquiry and results on the two sales to date have shown," he said.

"In the context of the current market risk factors and forecasts for where the office market may be headed, the pricing is very strong.

"If it provides any indication of what is to come then we may see a much more positive market in the near term than anyone would have dared forecast." 

Mr Wizel said the vendors had purchased the three properties as a package for $38.8 million (355 for $27.2m) just under five years ago with a view to hotel development. 

Last week a prominent Melbourne developer paid $9.5 million for the 102-108 Jeffcott Street property, while the last of the three properties - 371 Spencer Street - is now for private sale with an asking price of $10 million, Mr Wizel said. 

The Jeffcott Street property, a converted 1838 square metre warehouse on a 920 square metre site, is expected to make way for a high-density apartment development. 

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