Fortis director Charles Mellick said the properties would have an end value of around $400 million after redevelopment. “We still see people moving out of the CBD,” he said.
The latest acquisition was the Appel family’s South Melbourne office building at 18-22 Thomson Street which transacted for $6.9 million.
The three-level 1970s-era office building sits on a 496 square metre site, one block back from Albert Park Lake. The property is not far from Pallas’ new headquarters on Palmerston Crescent and neighbours include Tim Gurner’s 10-level 74 Eastern apartment project.
Mr Mellick said it would be redeveloped into a $27.5 million office.
“Premium office space in South Melbourne is in great demand. We’ve already leased out 60 percent of Pallas House through off-market deals over the past four months.”
The deal was negotiated by Appel Property’s Ben Appel and Tomassi & Co’s Alby Tomassi.
Mr Appel said his family’s time as property developers had come to an end and the building had reached the “functional obsolescence” stage.
The move comes as Pallas’ property development arm Fortis received approval to go ahead with its three-story luxury apartment project in Brighton.