China-based developer Hengyi will sell down its remaining stake in its The William project in Melbourne, including nine retail outlets and four offices, with expectations around $25 million.
The developer, an affiliate of mainland Chinese player Shandong HYI, rebirthed the former William Street office as a $200 million, 24-storey serviced apartment and residential complex in 2015 after buying it for $45 million.
The two buildings at 199 William Street, connected by enclosed overhead walkways on the upper floors, had sat idle since Telstra vacated in 1994.
Hengyi property director Dean Fossey confirmed the group will divest its remaining holding in the building – nine fully-leased shops on the ground level in Williams Court and four offices on level one.
The shops include a cafe, hairdresser, sushi bar, laundromat, dry cleaner and a Middle Eastern restaurant, Tahini.
One office is leased on a 10-year deal to Wyndham Resorts – who took a large stake in the building from Hengyi to operate as serviced apartments – the others will be sold with vacant possession.
CBRE’s Tom Tuxworth, appointed to manage the sale with colleagues Paul Tzamalis, Nick Lower and Josh Rutman, said the shops were expected to fetch between $470,000 and $4.5 million.
Hengyi was taking advantage of the “unprecedented yield compression we have seen over the past 24 months”, he said.
Clamour from investors for CBD retail assets has seen yields fall below 4 per cent.
A ground floor shop at 326 William Street sold for $4.81 million in January on a 3.95 per cent yield, another at 306 Flinders Lane recently fetched $2.95 million on a 3.81 per cent yield.
Retail specialist Zelman Ainsworth said major private and institutional landlords in the city’s west end were reinvigorating their retail offerings.
Grollo Group, along with co-owner St Martin, are midway through a refurbishment of the landmark Rialto to include 3000 square metres of retail, anchored by Mercedes Benz.
The Juilliard Group has finalised leases on 23 shops, anchored by SAKE, set to open next month, in St James at 555 Bourke Street, he said.
Mr Fossey said Hengyi will concentrate on its two remaining projects in Melbourne, the 69-level Light House apartment at 450 Elizabeth Street and the 1039-unit Swanston Central in Carlton’s former CUB site.
It was also developing a 50-level residential tower in Auckland, he said.
By: Simon Johanson