Myer family to sell St Kilda Road complex

The Myer family will offload a premium St Kilda Road office to tap strong investor interest as Australia's commercial property sector nears a cyclical peak spurred by falling vacancy rates and rising tenant demand.

The family's private investment vehicle has listed the seven-level Gateway building at 312 St Kilda Road through agents CBRE with expectations around $65 million.

The office has 10,000 square metres of lettable space which is occupied by tenants Healthscope, Vestas and Manpower Services.

It includes a major commercial car park with 268-vehicle capacity.

Myer Family Investments' chief executive John Russell said the family had owned the property for more than a decade.

One of Melbourne's famed leafy boulevards, St Kilda Road has been the focus of intense investment activity over the past year.

Most recently, Vantage Property Investments purchased Singapore developer CEL Australia's five-storey office at 420 St Kilda Road for $68 million.

Vantage acted on behalf of US private equity giant KKR.

Another Singaporean group, Rockworth Capital, outlaid nearly $98 million to purchase the boulevard's tallest tower, a B-grade 23-level tower at 390 St Kilda Road put on the market by Sydney-based fund manager Fort Street Real Estate Capital in April.

The Property Council of Australia records a vacancy rates for St Kilda Road at 11.3 per cent.

Agents maintain the PCA figures are overinflated because they include vacancy in many buildings that are in the process of being converted to residential apartments.

CBRE's Kiran Pillai said rental growth on the boulevard had been out-performing most office markets around the country.

"The strong direct A-grade vacancy rate and rent growth over the past two years has been a big factor in the increased levels of investor interest in St Kilda Road," he said.

Vacancy rate for A-grade on the strip was running at 6 per cent, he said. Similar stock in the CBD has a vacancy of 6.5 per cent.

Another Singaporean company, Lian Beng, recently sold a development site at 596 St Kilda Road for $34 million to a Taiwanese developer after obtaining a development permit for a Bates Smart-designed 19 level building with 170 apartments.

This story Myer family to sell St Kilda Road complex first appeared on The Sydney Morning Herald.