Monark Property Partners has backed Melbourne’s inner-suburban office market to flourish post-pandemic, funding the construction of four boutique developments worth a combined $90 million.
Developer Curtis York’s office project in Prahran is 50 per cent leased.
As well as advancing $50 million of construction funding for the projects, the Liberman family-backed non-bank lender has leased a whole floor in one of the developments – a five-storey commercial building in Prahran being developed by Curtis York – to serve as Monark’s new offices.
“We very much subscribe to the theory that well-designed, boutique commercial office buildings located in inner-city fringe locations will be strong performers in a post-COVID economy,” said Monark co-founder Adam Slade-Jacobson.
“There is a genuine desire to work close to home in office buildings that are adaptable, energy-efficient, offer outdoor access, fresh air and enable businesses to control their own environment,” he said.
The Curtis York project at 390 Malvern Road, for which Monark is providing a senior debt facility, is already 50 per cent leased. Amenities include a rooftop terrace and end-of-trip facilities.
Monark’s six-year lease there will kick off next year.
“The city fringe market has become highly desirable as businesses seek to locate to thriving neighbourhoods that are accessible and vibrant,” said James Way, who co-founded Curtis York with Nick Peters.
Monark is also financing two commercial boutique office developments in Cremorne, a fringe suburb home to many technology companies.
One is a 1400sq m, seven-level building with end-of-trip facilities and communal spaces. The second, 14 semi-attached three-level offices offering about 2500 sq m of net lettable area, is significantly pre-sold.
COVID has driven a psychological shift in the way people work.
— Adam Slade-Jacobson, Monark co-founder
Monark is also providing construction finance for a boutique commercial development at 1-9 Sackville Street, Collingwood, being undertaken by Ricdanic Developments.
The nine-storey office building with 5500sq m of net lettable area has also secured leasing pre-commitments and is under construction.
Reinforcing Monark’s confidence in the city fringe and suburban office market, Mr Slade-Jacobson said the non-bank lender had noticed smaller tenants tended to move more quickly to a 100 per cent return to the office compared to larger companies, which are typically located in the CBDs.
“This has helped strengthen demand for suburban office [space],” he said.
“There is also an economic benefit for smaller tenants relocating to inner-city fringe locations, such as lower rents and reduced travel times.”
Net rents in the Curtis York building average $570 per square metre.
“COVID has driven a psychological shift in the way people work,” Mr Slade-Jacobson said.
“While the CBD is very slowly improving, with occupancy rates of between 25 and 45 per cent, smaller boutique office buildings that are well-designed will appeal to COVID-conscious tenants.
“What you are getting with these buildings is flexible floor plates, modern workspaces and control over your own environment.
“You’re entering a beautiful lobby with plenty of fresh air – they’re becoming very homely.
“They’re drawing a lot of people into them, which is why we are funding a lot of these projects.”