Scarcity drives Lonsdale St deal Author: Mathew Dunckley Date: 07/06/2006 Publication: The Financial Review Section: Property Page: 74
Victorian racing identity John "Dr Turf" Rothfield has sold a Melbourne CBD office and car parking building at 380 Lonsdale Street for $30.5 million.
The selling agent, Knight Frank Victorian managing director Paul Burns, said the sale to a local private investor equated to a 7.35 per cent yield, but he refused to comment on the identity of the buyer.
The property includes a multi-level car park, office and retail complex and runs between Lonsdale and Little Lonsdale streets.
Mr Rothfield is the sole director of the company that bought the property in the early 1980s.
Knight Frank's Clinton Baxter and Savills' Anthony Wilson were joint agents on the deal.
The sale followed an expression of interest campaign that concluded in April.
The seven-level building, which has 5454 square metres of lettable office and retail space, is fully leased.
Tenants include the Equal Opportunity Commission, Meridian International School and Peregrine Adventures.
Peregrine Adventures recently committed to a new 10-year lease.
The 445-space car park is operated under a management agreement with Wilson Parking. Some spaces are available to tenants.
"The two key elements of this property, the car park and the office, provide an in-built investment diversity that is relatively scarce," Mr Burns said.
"And in an increasingly competitive market, this property offered purchasers both the opportunity to add value via potential further development in the medium term and long-term flexibility and investment growth."
Mr Burns said the building was close to Melbourne's retail core and legal precinct and featured low-rise office accommodation on floors of more than 2400 sq m. It also had a mixture of new and long-term tenants and a land area of more than 3000 sq m which offered the potential for further development.
Mr Burns said rental income was relatively modest but growth was expected as most tenancy agreements had started only recently.
"A car park investment in the Melbourne CBD is a rare opportunity," he said.
"In the past few years, only a handful of car parks have been available for purchase.
"The supply of new car parking in the vicinity of 380 Lonsdale Street and the CBD in general has been and will continue to be limited."
Mr Burns said Melbourne City Council's draft transport strategy was to give priority to public transport, cycling and walking over cars.
"As a result, the construction of new car parks in the area by developer seems unlikely," he said.
Mr Burns said that although the facility had lifted its charges to cope with the Victorian government's controversial car parking levy it had not affected its patronage.
"People who drive in to the city to shop at Melbourne Central do not do it every day and they are not as sensitive to a shift in car parking prices," he said.
Car parks that relied on long-term rentals to city workers would more likely be feeling the effects, he said.