The Australian Financial Review - Tuesady 2 March, 2004.

Bright ray of Sunshine in Melbourne
Nicole Lindsay

A state government building in Melbourne's outer western suburb of Sunshine has been bought for $8.26 million. The VicRoads Norwest regional office was sold by a private syndicate to an unlisted trust that specialises in government buildings.

The building is leased to VicRoads, a Victorian government statutory authority, for 10 years from 1997 with a passing income of $856,000 a year, including a fit-out rental of $221,000. The sale reflects a yield of 8.47 per cent on the base rental.

The fit-out component of the rent ends in 2007 when the initial lease period expires.

The sale was conducted by Jones Land LaSalle agents Nicholas Anagnostou and Justin Clarkson, who declined to identify the buyer or the vendor of the site.

A 3270 sqm office building was built on the 1.092 hectare site in 1997 at 499 Ballarat Road in Sunshine, about 30 minutes from Melbourne's CBD. It is understood the buyer is Australian Public Trustees.

Mr Anagnostou said the property was keenly sought after and there were seven bidders. The 8.47 per cent yield was high, given the non-traditional location, and it compared favourably with other suburban commercial transactions in more traditional locations such as Camberwell, which had yields of over 9 per cent, he said.

"Clearly investors have broadened their horizons, and with Melbourne's continued residential growth to the north and west, it gives investors greater confidence. The established traditional boundaries no longer apply," he said.

"There are a number of new players in the market, mainly smaller unlisted property trusts, looking to establish new commercial office vehicles, together with a few similar groups which have re-emerged after dormant periods," he said.