CostaFox is paying $28 million for one of Melbourne’s most distinctive commercial properties – The Tea House, at 28 Clarendon Street, Southbank.
The six-level building was for years after completion in 1888 the tallest structure outside of the CBD.
Designed by James Moore and John Grainger for printers and manufacturing stationers, Fergusson and Mitchell, and once known as Robur Tea Building, The Tea House is protected from demolition, Heritage Victoria describing it as “one of the finest and most prominent examples of a 19th century Melbourne warehouse”.
But with Melbourne becoming a global city since that time – the underlying value of the 2948 sqm plot, near the Yarra River banks, between Melbourne Convention and Exhibition Centre and Crown Casino, has been rising.
The vendor of 28 Clarendon Street, a private investor, paid $15 million in 2008.
In 2017, an application to incorporate The Tea House with a 39-storey hotel and apartment building on the southern edge of the site facing Normanby Street was proposed but never proceeded.
CostaFox, an active, strategic investment company, which builds residential and commercial property, must also be considering the options it will have utilising the airspace or subdividing and proposing something new on vacant tracts of 28 Clarendon Street.
In 2002, the owner of a heritage protected home turned nightclub at the centre of an enormous site at 83 Queens Road, at the bottom of Albert Park Lake, lifted and shifted the structure, giving it a larger more flexible footprint later replaced with an 18-storey apartment building.
Opposite Crown Casino’s grand west entrance, any new development at 28 Clarendon Street could find favour as an office, apartment building, hotel – or a mix of all three – incorporating lower level retail.
Melbourne’s tallest skyscrapers today – Eureka and Prima Pearl – are a block away.
Nothing to see here: CostaFox
Of its intentions, CostaFox managing director Michael Fox said only that it planned “to restore the building to its former glory”.
“We are elated with this acquisition,” the executive said. “To buy a site like this in this location with such a beautiful heritage building is difficult at the best of times”.
Development director Geno Hubay added CostaFox has commenced a worldwide search “to find the best architects to help us bring Melbourne’s The Tea House building back to life”.
The Melbourne developer has a track record of incorporating historic buildings into new developments.
In 2014, it won the Australian Property Institute Heritage Property Award for its redevelopment of the former Art Deco Tip Top Bakery, in Brunswick East.
Last year it received approval to develop an eight-storey strata office complex within the airspace of a red brick warehouse at 1-11 Gordon Street, Cremorne.
Five months ago CostaFox sold this office on a funds-through basis to BayleyStuart for $50 million.
The Tea House deal sealed following off-market campaign
Thomson Geer Lawyer’s Eu Ming Lim acted as the vendor’s legal representative.
With 3250 square metres of lettable area, The Tea House has been largely vacant for several years.
The property attracted interest from several parties, the agents said – “an indicator of the positive investor sentiment in Melbourne’s sub-$100 million office sector”.
“Being Melbourne’s first major office transaction for 2020, the metrics of this sale provide a sound reflection of ongoing buyer confidence in the Melbourne office market,” Mr Tong added.
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