Bill McNee’s Vicland Property Group has started construction of a major South Yarra office on a speculative basis.
The nine-level, 6295 square metre building at 11-13 Wilson Street (pictured, top) is due for completion in the third quarter of next year.
With an estimated end value of
$100 million, Mr McNee is building the office without bank funding.
The move puts Vicland in the box seat for prospective
suitors, with several of the other South Yarra offices recently unveiled still
seeking pre-commitment, and having no firm start or end date.
reported in April, the size of the office market in South Yarra is set to almost
double by 2023.
Vicland paid Newmark Capital, the Jam Factory owners, $12.6 million for 11-13 Wilson Street last year following an off-market campaign.
The 1125 sqm holding previously accommodated a
three-storey car park.
Outside of the Melbourne CBD, South Yarra, along with
South Melbourne and Cremorne, command the city’s highest average office rents –
premium product speculated by agents to exceed $650 per square metre, per
Vicland Property Group development manager, Jake Steinhart
said that while Cremorne has been receiving recent attention as a boutique
employment precinct, South Yarra has the same drivers, including a shortage of
supply, and pent-up demand.
“South Yarra and in particular Wilson Street benefits
from having access to a high-quality demographic of professionals,
better-to-none amenity and public transport which includes two train stations
as well as trams and buses”.
The Wilson Street office is the second commercial
building Bill McNee has won approval to build in South Yarra recently.
Last October, we reported, exclusively, that Vicland Property Group would also construct a mixed-use complex on airspace atop train lines opposite the South Yarra station.
Newmark Capital acquired 11-13 Wilson Street when it paid
$165 million for the Jam Factory shopping centre in 2016.
Last year, Newmark Capital won approval to replace Jam
Factory airspace with four buildings, the tallest rising 17-levels, and set to
contain a total of about 50,000 sqm of offices.
In the immediate area surrounding the Jam Factory, the
Spotlight Property Group has mooted to replace 402-416 Chapel Street, South
Yarra, with a mixed-use complex containing a 10-storey hotel, set to be managed
by Starwood Hotels & Resorts as an Aloft.
An eight-level residential building is also proposed for
430-438 Chapel Street – a site for decades known as the Chapel Street Huts.
This site’s co-owners, Franze Developments and Sampiere
Group paid $11 million for this c800 square metre site following an off-market
negotiation in 2017 with the former owners, the Penprazes family, which had
owned it for about five decades.
Elsewhere in the suburb, Goldfields is proposing a 24-level
office at 627 Chapel Street, South Yarra.
Goldfields acquired 627 Chapel Street for $50 million in
2017 from Fridcorp which had earmarked it for a 38-storey apartment building.