Charter teams with PSP Investments for Brisbane strike

The new development at 31 Duncan Street. Picture: Supplied

Property funds powerhouse Charter Hall is again putting its stamp on the Brisbane market, with the listed group working with Canadian pension fund PSP Investments to secure a major office tower being built in Fortitude Valley.

The development, on the site of the current Chinatown Mall car park, has a mooted value of $375m and is being undertaken by Tribune Properties and LKM Holding’s Tim Mahony and Andrew King.

The pair, which have a strong track record in Brisbane, last year secured Urban Utilities as anchor tenant for the 17-storey office tower at 31 Duncan Street, which is expected to be completed by December.

All up the private developers have secured 70 per cent leasing precommitments and will provide a rent guarantee over the balance of the space, with subsequent secured lease terms determining the final cost of the investment to the Charter Hall partnership.

The structure is in line with Charter Hall’s focus on long-leased assets across its platform and its ability to garner the support of global pension funds for property plays.

Charter Hall chief executive David Harrison noted the deep ties between the property funds manager and the Canadian group.

“Charter Hall and PSP have partnered on various investment partnerships, including the $4bn CHOT portfolio, $1.6bn BSWF portfolio, the $930m Melbourne CBD Telstra HQ at 242 Exhibition Street, whilst also developing and then realising the nearby BoQ-anchored project at Newstead, completed in 2017 and subsequently sold for $250m,” Mr Harrison said.

PSP Investments head of Europe and APAC real estate investments Stephane Jalbert said the group was pleased to extend its long-term relationship with Charter Hall, and looked forward to expanding its real estate investments in Australia.

“We have invested in the Australian real estate markets for over 10 years and look forward to exploring further sector opportunities,” he said.

The building will be multi-tenanted, capturing the demand from the surrounding public transport, including Fortitude Valley train station.

Mr Harrison said the building was near local retail and hospitality outlets and the CBD and would suit a range of occupiers. “Large 2,000sq m floor plates, retail facilities and high-quality end-of-trip facilities combine to provide an excellent investment proposition,” he said.

The tower will have 25,000sq m of commercial space, 464 car parks, an 80m frontage to the Duncan Street Mall, a landscaped roof terrace, running track and gym, state-of-the-art end-of-trip facilities, and touchless accessories, reflecting a Covid-safe work environment. Hutchinson Builders and the project team are working on the building, which was designed by Nettleton Tribe Architects. Charter Hall is drawing on its extensive network of offshore pension investors to secure properties at an early stage and is even undertaking takeovers with their backing.

Notably, Dutch group PGGM is backing its $1.3bn takeover of Irongate, where it was granted due diligence earlier this month.

The transaction is being brokered by CBRE.

Fortitude Valley is benefiting from the post-pandemic shift back into offices, which is driving a greater focus on exercise, wellness and entertainment experiences.

CBRE has previously identified the shift in demand as driving Fortitude Valley’s evolution as an alternative to the CBD, as it offers a similar level of amenity, transport and residential living opportunities.

Two billion dollars worth of office projects have either recently been completed or are now under construction in the area, with the office tower in Duncan Street the most recent to start construction, and another six slated commercial projects in the pipeline.

The area’s office district has been buoyed by high population growth in the area, which has increased by 40 per cent from 2016 to 2021, prompting more residential projects, including build-to-rent schemes.