Boulevard jewel on market

Philip Hopkins February 22, 2012

A BUILDING on St Kilda Road that reflects the boulevard's recent resurgence as an office precinct has hit the market. Centuria Capital's property funds management subsidiary, Centuria Property Funds, will offload 607 St Kilda Road fully leased after years of refurbishment.

Property Council of Australia figures show that the vacancy rate in the precinct has fallen from 13.9 per cent to 10.8 per cent, and Colliers expects this to further decline to about 8 per cent by the end of the year.

Centuria Property Funds chief executive Jason Huljich said the lower vacancy had been driven by economic growth, tenants looking for large tracts of inexpensive office accommodation outside the CBD, and the limited new supply in the fringe market.

Centuria bought 607 in 2002 for $21 million and has spent about $5 million refurbishing the building since. Mr Huljich said the building had a 4-4.5 NABERS star rating, but was exempt from mandatory disclosure because the services had been upgraded during the new law's exemption period of 12 months.

Two recent leases were made through Jay Pavey of Lemon Baxter. They were Alfred Health, which will occupy the remaining three floors totalling 2407 sq m for an initial period of nine years at a starting net rent of $260 per sq m.

French multinational Sodexo, which relocated from Hawthorn in December 2010, signed a seven-year deal across 1288 sq m at a net rent of $240 per sq m. This followed recent renewals within the building by Celgene, Six Degrees, Software AG and BDA Marketing.

Knight Frank and Colliers International have been appointed to sell the asset. Expressions of interest for 607 St Kilda Road close on March 15.