- The 8-level Dandenong office building will be tenanted by the State Government's Finance Department until 2032
- Secure tenant covenant to be strong drawcard for investors, says Paul Kempton
- Dandenong to receive $2b injection to reinstate the area as an economic hub
The Government Services Office in Dandenong has been unveiled to the market, marking the first Melbourne government office to be offered for sale in 30 years.
Located at 165-169 Thomas Street in Dandenong, the 8-level office building is currently being campaigned for expressions of interest by real estate agency Knight Frank.
Constructed for the Victorian State Government in 2011, the office building lies on a generous 2,502 sqm site with a total net lettable area of 15,070 sqm.
Secure tenancy expected to attract buyers
The asset is expected to draw strong interest from investors, with a lease in place with the State Government’s Finance Department until 2032 and the likelihood of a renewal.
Additionally, the current annual rent increase of 3.50% is expected to be a point of attraction for keen buyers.
The asset is currently owned by high-profile Australian business tycoons, the Grollo family, and is expected to return a price of over $170 million.
The International Expressions of Interest campaign is being lead by Paul Kempton and Trent Preece of Knight Frank on behalf of the vendors.
Mr Kempton said he anticipates earnest interest from local syndicators alongside domestic and international institutional buyers, whom he believes will be attracted by the strong tenant covenant.
“This is the first government long-leased office investment in Melbourne to be offered to the market in 30 years,” he said.
“This investment offering is incredibly rare and will be highly sought after.”
Paul Kempton, Knight Frank
“The security of the lease to the Victorian State Government, which will run for at least another 10 years, will attract buyers, but beyond that there is certainty in the office market, with Dandenong having one of the lowest office vacancy rates in Melbourne as tenants increasingly move to non-CBD locations,” Mr Kempton added.
$2b to be injected into Dandenong area
According to Mr Preece, the area in which the asset is located is the focus of Victorian State Government’s ongoing project, the Revitalising Central Dandenong Initiative.
The project will deliver a substantial injection to the area, supported by a $290 million commitment from the State Government and over $1 billion in private investment.
The initiative seeks to transform the area into a vibrant urban hub, delivering new commercial and retail spaces and creating more than 5,000 ongoing jobs in the process.
“This property allows investors to secure a rare 100 per cent freehold interest in a premium investment offering in a well-established Melbourne office market that has major growth occurring via significant surrounding investment.”
Trent Preece, Knight Frank