Two wealthy Melbourne families are looking to cash in on surging land values in Cremorne – the tiny inner city suburb that has become a hub for technology and creative companies – by combining two office buildings and offering them as a $20 million-plus future development site.

The 1750-square metre corner site at 116-124 Balmain Street, comprises 118 Balmain Street, a two-storey office building bought by the Pizmony family for $4.9 million in 2006 and a smaller two-storey property at 122-124 Balmain Street bought by the Lawrence family’s Alexander Corporation for $1.5 million in 2003.

A $20 million price tag equates to a land rate of more than $11,000 per square metre, almost four times the $3000 per sq m being achieved for sites in Cremorne five years ago, according to selling agents CBRE.

The site does not have a planning permit but a proposed scheme by architects Jackson Clements Burrows is for a nine-storey office building.

Michael Lawrence, managing director of The Alexander Corporation, said both families had “sat and watched” smaller properties sold off in Cremorne recently and realised there was a good opportunity to combine their buildings and offer them to the market as a prime development site.

“Over the time we have owned our building, the suburb has just improved out of site with all the new facilities, cafes and offices. My own children want to work in Cremorne,” he told The Australian Financial Review.

Once a slum and then a grim industrial suburb on the banks of the Yarra, Cremorne’s former warehouses have become commercial offices for the likes of Tesla, Uber, the Walt Disney Company, Carsales.com.au and REA Group with the vacancy rate falling below one per cent and office rents soaring to more than $500 a sq m.

Cremorne’s growing reputation as a hipster suburb has attracted new office development with Caydon Group recently securing accounting software group MYOB as an office tenant at its mixed-use Malt District on the site of the former Nylex silo site. 

Recent sales include an 1180 sq m site at 1-11 Gordon Street bought by developer CostaFox for $12 million in February and an office building at 44 Gwynne Street which changed hands for about $8.6 million on a five per cent yield.

Last year, the founder of Blazer Clothing, Peter Murray, paid the Schwartz family more than $10 million (more than $13,000 a sq m) for a warehouse on a 761 sq m site at 33 Cremorne Street.

The 116-124 Balmain Street development site includes 35 metres of Balmain Street frontage and comes with a $668,000 income stream from existing tenancies. It’s being marketed by Julian White, David Minty, Chao Zhang and Josh Rutman of CBRE.

“Existing [Cremorne] office building values have surged due to this unprecedented tenant demand, with some of the most recent office sales showing yields of around five per cent,” Mr Rutman said.

Online classifieds business SEEK is hoping to develop a 20,000 sq m campus in Cremorne while developer Alfasi Group received approval late last year for a nine-storey commercial building at 510 Church Street.

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