Cadbury crafts Mondelez a big suburban lease

75 Dorcas Street, South Melbourne Photo: [email protected]杭州夜网 75 Dorcas Street, South Melbourne Photo: [email protected]杭州夜网

75 Dorcas Street, South Melbourne Photo: [email protected]杭州夜网

75 Dorcas Street, South Melbourne Photo: [email protected]杭州夜网

Global food conglomerate Mondelez has signed the biggest leasing deal on Melbourne’s city fringe for the year.

Mondelez, which owns the Cadbury and Kraft brands, has taken out a 10 year lease on 4600 square metres at 75 Dorcas Street.  It will take out level 10 and part of level 9 of the 11-storey building late in 2015. The multi-national corporation is moving out of South Wharf Tower and reducing how much office space it occupies by about 25 per cent .

Colliers International agents Ben McKendry and Rob Joyes negotiated the lease, with Cushman & Wakefield’s Danny Green acting for Mondelez.

Mr McKendry said the building’s long time tenant ANZ had renewed its option in March but contracted its space, freeing up two floors.

“The building has been occupied by ANZ as its sole office tenant since it was built in 2002,” he said.

Colliers is marketing the remaining 1525 square metre space in the building, which is controlled by Investec. German pension fund SachsenFonds bought the building from Investa in 2008, paying $135.5 million but SachsenFonds’ Australia investment fund which owned the building is in administration.

SachsenFonds attempted to sell the property for $130 million in 2011 and records show Investec purchased the building’s mortgage in March 2014 for $105 million.

Mr McKendry said the building has recently undergone an extensive refurbishment which had turned it into an A-grade building closer in style to the newer stock in Docklands, the CBD and Southbank.

“It was already a relatively new building which is a rarity in the city fringe office market. However, there was potential to take it to the next level. It is now a best-in-class building.”

Mr Joyes said the residential shift in the St Kilda Road market was triggering gentrification in the South Melbourne precinct.

“There’s a lot of tenants leaving St Kilda Road and looking at other markets because it’s becoming very residential and the office supply is diminishing. South Melbourne is an undervalued market – it’s in a great location close to the city.”

Tenants are moving off St Kilda Road and into fringe markets. At 60 Albert Road, South Melbourne, 19 new leases have been signed in the past 12 months.

The acquisition market is now considerably hotter since 2011 when SachsenFonds last tested the market, with development sites on St Kilda Road and those located near Fishermans Bend commanding high prices.

The Victoria Police building fetched $58 million from an offshore developer who has plans for residential development. And Les Smith and the Schwartz family paid $80 million for the Fawkner Centre which will be transformed into a $300 million luxury residential project.

But investment properties are also keenly sought. An 11-storey office tower at 616 St Kilda Road is in due diligence and expected to sell for up to $55 million; and Crescent Wealth paid $30.75 million for 10-16 Dorcas Street, delivering Cromwell Property Trust a 20 per cent premium on its August 2013 purchase price.