Boutique developer CostaFox has paid $12 million for a Cremorne site offloaded by one of the hot precinct’s key players.

Property values in Cremorne’s office precinct, dominated by creative and technology industries, have surged in the past two years - along with the rents which are pushing well past $500 a square metre for new space.

Title deeds show Icon director Ashley Murdoch paid just over $7 million for the 1180 square metre site at 1-11 Gordon Street, which he amassed in two lots over the past couple of years as a private investment.

The off-market deal, at $10,169 a square metre, represents a 67 per cent increase in value. It was negotiated by Jeremy Gruzewski, who recently left Colliers International for boutique agency Beller.

Icon is developing a new office building on the old Nuttelex site at 600 Church Street, Cremorne.

The sale follows hot on the heels of an investment deal in Cremorne, struck on a sharp 5 per cent yield, handled by Teska Carson director Adrian Boutsakis.

The 1000 square metre office building at 44 Gwynne Street is understood to have sold for around $8.6 million. Mr Boutsakis, who declined to confirm the price, said there were plenty of bidders for the property, which returns $4341,000 a year in rent.

Rising rents are driving the surge in values. Mr Boutsakis recently leased the whole of a new 1420 square metre building at 8 Gwynne Street for $538 a square metre to Ratio Consulting before construction was completed.

Cremorne Studios, a five-level building at 17 William Street with no carparks, is also fully let before completion, with tenants paying $500 a square metre net, he said.

“Sales rates are $10-12,000 a square metre depending on the development site and it is driven by the rents. Those prices stack up if you’re getting over $500 a square metre in rent,” Mr Boutsakis said.

CostaFox Developments is also planning a new 5000-6000 square metre office project for 1-11 Gordon Street.

CostaFox is a joint venture between the Geelong-based Costa family’s investment vehicle Costa Asset Management and Michael Fox, a property veteran who ran Little Projects for billionaire Paul Little until 2015.

Mr Fox said the acquisition fits the company's diversification strategy. It has a $600 million pipeline in different sectors of the market, including residential, industrial and commercial.

Mr Gruzeswki said “the property has no plans and permits in place but we would expect a 6-8 level commercial office building will be developed to feed the strong tenant demand".

"Any development will have to be sympathetic to the heritage façade which means a cool building will be developed to capture the eye of the creative types wanting to be in the area," he said.