Rare chance to buy a police station – and there’s two of them

Two Victorian police stations are on the market for about $10 million each in a rare opportunity for commercial property investors.

ISPT, one of Australia’s largest unlisted property fund managers, is selling the Narre Warren and Mill Park stations in suburban Melbourne at a time of rising demand for long-leased social service and infrastructure properties.

ISPT fund manager Georgina Bishop said a rebalancing of ISPT’s CIB Fund, which controls a portfolio of Victorian law courts and police stations, prompted the sale.

“The strong performance of the fund and some recent acquisitions have prompted the decision to sell the Narre Warren and Mill Park assets, which have been identified as highly appealing given their tenancy covenants and future potential,” Ms Bishop said.

The Narre Warren Police Station and another in Mill Park are on the market with pricing expectations of about $10 million each. Picture: realcommercial.com.au/for-sale

CBRE Capital Markets – Office agents Tom Ryan and Scott Orchard, along with Sandro Peluso and Jimmy Tat of CBRE’s Social Infrastructure team, are running the expressions of interest campaign.

Mr Ryan expects the state government leases, extensive landholdings and building upgrades to be key buyer drawcards.

“Police station freeholds are seldom offered for sale, with the campaign also coinciding with increased buyer demand for robust tenant profiles in the wake of the pandemic,” Mr Ryan said.

“Both assets house unique infrastructure and improvements and have benefitted from recent building upgrades.”

The properties at Narre Warren in Melbourne’s south-east and Mill Park in the north-east are fully leased to Victoria Police.

CBRE said the current leases run until August 2025, with no further options.

Police stations like the Mill Park property are seldom offered for sale. Picture: realcommercial.com.au/for-sale

The pricing expectations for each property are about $10 million, CBRE said.

The two-level Narre Warren station building is 2099sqm and sits on a corner site of 3619sqm, offering a net annual income of $615,688.

The Mill Park property has a two-level building of 2123sqm on a large 6173sqm landholding and offers a net annual income of $648,654.

Both assets are predominantly office buildings for administration and dispatch purposes, and include meeting rooms, public reception areas and some on-site holding cells.

Both police stations are positioned on large landholdings. Picture: realcommercial.com.au/for-sale

Mr Peluso said interest in social service and social infrastructure properties has increased with investors focusing on environmental, social and governance factors.

“There has been an investor gravitation towards social service and social infrastructure properties in recent years as investors seek to strengthen the ESG credentials of their portfolios, with the replacement costs and future possibilities of each asset making the investment case very compelling,” he said.

ISPT’s CIB Fund also owns the Dandenong and Frankston police station and law courts buildings, as well as police stations in Moorabbin, Melton, Keilor Downs, Craigieburn and Wangaratta.

The CIB Fund bought the Country Fire Authority headquarters in Burwood East for $35.8 million last November, in its first acquisition in 20 years.