Former Age newspaper building to be sold for $120m

The building’s changing fortunes show the tough times for the office market as the building finds a new life after the paper departed.

GPT's wholesale office fund is selling 655 Collins Street in Melbourne.

One-time fashion mogul Naji Imam has swooped on the former Age building on Melbourne’s Collins Street in a deal worth about $120m.

The well-known block at 655 Collins Street, which sits across from Southern Cross Station, is being sold by a fund run by the listed GPT Group as it trims its holdings.

It is being picked up by the man behind the Najee clothes label, which had a chain spanning the country in the 1980s befores it collapsed in the 1990s. He has been in property development for more than two decades and is among the bargain hunters to emerged as big players sell out.

The block, once known as the Media House, was purpose built in 2009 for Fairfax, and served as the headquarters of The Age.

The high-profile building still houses radio station 3AW and the listed Nine also pays rent on floors that Fairfax Media once occupied, although these have been subleased to new tenants. The Fairfax papers shifted to the Docklands a year after their former owner merged with Nine in 2018.

3AW remains in the top floor of the building, and Nine also kept control of the flashing billboard opposite the railway station.

Much of the office space was initially taken up by the national broadband provider, NBN Co. But the building is now sublet to a range of tenants including Service Stream, which shifted from 357 Collins Street, and ECA College, which is moving from 399 Lonsdale Street.

Fairfax had struck a 20-year lease when the building was completed in 2009, and the incoming owner could reset the rents when it expires.

The building’s changing fortunes are partly reflected in the metrics on which it is trading. The building sale will show a passing yield of about 7.5 per cent, showing the risks that have crept into Melbourne’s office market. It was once held at about 4.75 per cent during the office boom when interest rates were at record lows.

A developer may look to undertake a residential project or expand the office space in future, but for now the Mr Imam is likely to focus on locking in new tenants ahead of the Nine lease running out.

The GPT fund picked up the building in 2014 as part of a larger parcel of assets carved out of the Commonwealth Property Office Fund, which was taken over by listed rival Dexus and the Canada Pension Plan Investment Board. But the fund has been selling assets and also put the Sydney headquarters of Google Australia up for sale.

That building, workplace6, was built in 2008, and hailed as the first office development in NSW to achieve top environmental ratings, and it has achieved carbon-neutral status. Google has invested heavily in the area and acquired the neighbouring property at 42 Pirrama Road for $170m and is overhauling it as part of its overall commitment to being in Pyrmont.

Both buildings assets are owned by the GPT Wholesale Office Fund, which has already sold off buildings in North Sydney and Parramatta to Asian-backed Freecity.

Real estate agencies Cushman & Wakefield and CBRE are marketing both assets, but they and the companies declined to comment.