Building leased to Space Q Capsule Hotel for sale

A prime freehold asset in the Sydney CBD’s tightly-held George Street is expected to attract strong investor interest due to its unique tenant and sought-after location.

The fully-leased building, at 752 George Street in Haymarket, is home to the Space Q Capsule Hotel, while the ground floor and mezzanine level retail space is leased to Hisshou Teppanyaki.

The Space Q Hotel, which holds a three year lease plus three year option, accommodates the four upper levels of the building, which totals 786sqm.

The hotel offers single and double bed accommodation capsules, which guests access via a keycard.

The freehold asset is being sold via an expressions of interest campaign. Picture: Supplied by Knight Frank

With its futuristic style pod rooms, the hotel is a popular cost-effective short stay accommodation option.

The property is being marketed as an Expressions of Interest campaign, via Knight Frank agents Linda Zhu and Dominic Ong, in conjunction with Savills’ agents Andy Hu and Jordan Lee.

Prime location a strong lure

The 231sqm site’s close proximity to Dexus’s Atlassian headquarters, near Central Station, as well as the Tech Central precinct, were set to attract strong buyer interest, Ms Zhu said.

“It’s only 100 metres away. So, it could be converted into something that is like a funky hotel, or like an office for a start-up,” she said.

“But I actually think it’s a real value proposition because if you look at the property it has already got four storeys. It’s getting a good, solid income. You can just landbank this for the next ten years.

“But we are likely to see investors that are happy to just own a building on George Street because that’s always going to be market proof.”

The hotel is a popular short-stay accommodation venue.
Picture: Supplied by Knight Frank

JLL Hotels & Hospitality Group senior vice president Andrew Langsford said opportunities for a property like 752 George Street were rare.

“It’s probably fair to say that all of Sydney has been very tightly held,” he said.

“If you want to buy something in Sydney and it certainly works for you – grab it.

“There’s typically only a couple of opportunities each year.”

The hotel is one of only a handful of pod/capsule hotels in Australia. Picture: Supplied by Knight Frank

Savills Asia markets Sydney joint state head agent Andy Hu said being among the growth corridor of the New South Wales government’s multi-billion-dollar Tech Central precinct, next to Sydney’s Central Station, was a strong lure for buyers.

“We are seeing a lot of active offshore capital actively chasing for opportunities within that precinct,” he said.

“Premium retail offerings along this section of George Street are rarely offered to the market and the high-exposure location of this asset is second to none.”

Hitting the market for the first time in three decades

The property has been owned by Roje Brothers Pty Ltd since 1992.

The Space Q Capsule Hotel spans four levels of the building. Picture: Supplied by Knight Frank

Local director and solicitor Raymond Lee – one of three directors who own the asset – said the popular Space Q hotel was likely to be a strong buyer drawcard.

“It’s a great concept and as far as I am aware there are only two capsule hotels in New South Wales and possibly Australia. And it would appear attractive to young travellers,” he said.

“This is clearly an affordable investment for a high-net person or family to retain a free standing freehold property with potentially a very good income, or alternatively there is development potential there possible with adjoining owners.

“It is an exciting time down this end of town.”