ARA, QuadReal unite on $330m East Melbourne office deal

ARA has teamed up with QuadReal Property Group to finalise its pre-purchase of an East Melbourne block for about $330m.

200 Victoria Parade has been acquired by ARA and QuadReal

Strong demand for office assets was put on display this week with Singapore-listed ARA Asset Management Limited teaming with QuadReal Property Group to finalise its pre-purchase of an East Melbourne block for about $330m.

The pair unveiled their acquisition of 200 Victoria Parade, saying they had set up a joint venture to acquire and manage investments in office and logistics in Sydney and Melbourne.

The acquisition is a marker of the heat in the local property market. The move was flagged by The Australian last month.

Time & Place founder Tim Price said the deal reflected the state of the commercial market and appetite from global investment funds.

“There has been a significant trend outbound from the CBD by both tenants and institutional investors in recent years as lack of supply has shifted the focus to Melbourne’s CBD fringe,” Mr Price said.

He said this had presented an opportunity for developers to ­secure well-located sites and building premium-grade commercial assets on the CBD’s doorstep. “We received an over­whelming response to the expression of interest campaign and are both pleased and proud to enter into partnership with a ­global ­powerhouse like ARA to fund and own the asset on ­completion.”

The developers last June brought in JLL’s Nick Rathgeber and Leigh Melbourne to manage an investment process for the project.

The building will sit next to Melbourne’s government precinct, with the A-grade office project to be completed in the third quarter of 2022. The proximity to the CBD is expected to attract top-grade tenants.

The large floor plans are designed for government and corporate tenants with large space requirements. The block is targeting 5.5-star NABERS rating and a 5 Green Star rating.

QuadReal managing director of Asia Peter Kim said Melbourne was a key focal point of the company’s global cities strategy.

“Our Victoria Parade investment represents a lot of what we like about this market — from the asset’s uniquely large floor plates to the best-in-class environmental sustainability initiatives that we have planned for the building,” he said.

He declined to reveal how large the venture would grow but said it would be “meaningful to each party and we look forward to leveraging our combined insights, experience and expertise”.

“The allocation between each asset class will be opportunistic in nature and driven by the identification of market insights and ­opportunities,” he said.

ARA Australia chief executive David Blight said the Victoria Parade project represented an “exciting opportunity” to secure a strategic foothold in a prestigious location, and he flagged “many more” projects.