Strata office prices in Flinders Lane have doubled in two years driven by low interest rates, the low dollar and surging land values.
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A local fund manager, who has clients in China, snapped up an office at Brendan Sullivan's The Edition at 517-535 Flinders Lane – three days before its auction campaign started – paying $1.43 million.
CBRE agent Tom Tuxworth, who negotiated the deal with Nick Lower and Tim Last, said the price equated to $7600 a square metre – more than twice the price paid for the first office sold in the building two years ago.
Mr Sullivan bought the building from the Smorgon family in 2011 for $16.35 million but started progressively strata-titling offices in the building two years ago as their original tenants moved out. Thirty-two suites – stripped of dated fit-outs – have sold since August 2013. The building boasts a rooftop tennis court and barbecue and an eclectic mix of cafes on the ground floor.
"It usually takes 10 years for a properties to double in value so it's pretty remarkable for it to happen in two to three years," Mr Tuxworth said. "But people want to sit on the roof and eat their sandwiches in the sun. They don't want to be stuck in offices with old carpets and low ceilings and are prepared to pay a premium for it."
Mr Tuxworth said his team also sold a whole floor at 11-19 Bank Place to an IT business on Monday night for $2.6 million at $4634 a square metre. Sales in this building earlier in the year ranged from $4250 to $4964 a square metre.
"The market's pretty price driven. Where else can you buy in the city for around $1 million or $2 million," he said.
The deal closely follows another sale negotiated by Mr Tuxworth at 620 Bourke Street, where a 190-square-metre office (suite 101 on level one) fetched $1.07 million, or $5700 a square metre.
"It's cheaper to buy than rent," he said. "Debt is cheap and both these offices were bought by Chinese buyers so the lower Australian dollar gave them the capacity to pay a bit more."
The latest price at 620 Bourke Street is already advancing on the prices achieved earlier in the year by Savills Australia agent Jesse Radisich. Suite 102 sold to a Chinese immigration firm for $4300 a square metre and suite 802 fetched $3300 a square metre.
Mr Radisich said, "The market's very strong, driven by low interest rates, self-managed super funds and a lot of offshore buyers.
"People want to be in the CBD. It's a hub of activity," he said.
Prices for strata office suites at 140 Bourke Street in May also reflected this trend. Level one fetched $2.21 million in April after selling for $1.3 million in 2014.
