Interest rates a boon for Melbourne strata office sales

The Melbourne strata office market has come on in leaps and bounds in the past two years as tenants take advantage of low interest rates and buy their space instead of renting.

CBRE’s Tim Last says there has been a 25% uplift in values over the past 18 months.

“There is a lot of small businesses that are looking to buy instead of rent; you can borrow at such a cheap rate that it just makes sense,” Last says.

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He adds that Melbourne is not traditionally a large strata market, but that is starting to change, with CBRE selling more than $76 million of strata offices so far this year.

“The companies most active in this space are migration agents, lawyers, doctors, interior designers and architects,” Last says.

One strata building, Rutland House at Box Hill in Melbourne’s eastern suburbs, has secured five sales in the past six months from accountants, financial planners and investors.

An artist’s impression of the new Rutland House strata development in Box Hill

One education operator paid $3.8 million for two suites at 22 Rutland Road, which it will amalgamate.

In another deal, a Box Hill strata record rate of $8324 per square metre was struck when an international owner-occupier bought space in the building,

There is a lot of small businesses that are looking to buy instead of rent; you can borrow at such a cheap rate that it just makes sense

“This record sale rate, in addition to 85 per cent of the project already sold, highlights the significant demand for this quality office development,” CBRE’s Nick Lower says.

Closer to the CBD, lawyers, migration agents and an IT consultant have bought space at Flinders Lane on Bourke Street.

“And at the end of the process they can actually own the asset rather than pay off someone else’s debt,” last says.

This article originally appeared on www.theaustralian.com.au/property