Chemicals company Ixom has signed a lease on three floors of 1 Nicholson Street, Melbourne’s first glass skyscraper.
The 18-storey building’s landlord Charter Hall’s Direct Office Fund did the deal directly with Ixom, formerly the chemicals arm of mining services company Orica.
The tower in the north-east fringe office precinct, designed by Bates Smart, was built for ICI in 1960. That firm changed its name to Orica in 1998 and sold the chemicals business to Blackstone in 2015.
Head of Charter Hall Direct Steven Bennett said Ixom, which had previously sublet through Orica, now had a direct eight-year lease with the landlord on 2750 square metres in the building.
“They wanted security with their own long-term lease,” said Mr Bennett, who declined to reveal the rent terms.
“Once tenants have got into the building they don’t want to leave. We haven’t had any empty space available in the building since 2003,” he said.
But for the first time in 14 years Charter Hall has three floors at the top of the building available.
Mining services company Arup is moving in the fourth quarter of 2018 to Lend Lease’s $2 billion Melbourne Quarter project at Docklands.
“They’re moving because they’ve outgrown the space,” he said.
“From our point of view it’s a great time to be in the market and we think we’ll set a new benchmark. We’ve had good interest so far,” he said.
Recent research from Cushman & Wakefield indicates Melbourne prime rents have grown 8.7 per cent in the past year to an average $373 a square metre with incentives remaining stable at 30 per cent.
The building has recently had a substantial upgrade with $4 million spent on the lifts and a further $500,000 on end-of-trip facilities.
The Direct Office Fund (DOF) has a $1.025 billion portfolio of 10 buildings, with 75 per cent of its property in Sydney and Melbourne, with Brisbane and Perth making up the balance.
It is open to investors and returns 6.25 per cent a year in income.The unlisted property fund is making a concerted pitch for new investors and is now accessible through a range of investment and superannuation platforms.
The East Melbourne office precinct is very tightly held and has a vacancy level of about 1.5 per cent compared with Melbourne’s CBD vacancy of 6.4 per cent. The area is close to parklands and serviced by several tram routes and Parliament station.
A few doors down from 1 Nicholson, St Vincent’s Hospital has leased 837 square metres at 486 Albert Road.
The hospital will take out level one of the Catholic Archdiocese of Melbourne’s St Patrick’s Centre, formerly the VECCI building.
The deal was done by JLL leasing agent Richard Norman at between $350 and $370 per square metre net for five years.
The hospital is shifting its administrative team to make way for the St Vincent’s Hospital’s Aikenhead redevelopment project, a biomedical engineering research and education centre.