City office play sparks up in shadow of Sydney’s Brookfield Place

Overlooking Wynyard Park in Sydney’s CBD, 32 and 36 Carrington St are part of the Brookfield Place Sydney development.

Bidders are circling two premium boutique office buildings which directly adjoin the landmark Brookfield Place in the Sydney CBD in a sign investors are returning to the city.

Two separate buyers are targeting the purchase of 32 and 36 Carrington St with their combined price likely to approach the $110m mark.

They are looking to buy the neighbouring Carrington St office buildings which were restored in tandem with the $2bn Brookfield Place Sydney development.

The larger 36 Carrington St has drawn the Swiss AFIAA (Foundation for International Real Estate Investments) and the smaller asset has caught the eye of local April Group. Both have a substantial presence in Australia with AFIAA investing along the eastern seaboard.

In 2017, the foundation bought an office building in Melbourne’s 628 Bourke St for about $181m from M&G Real Estate Asia.

AFIAA then sold its HQ South office building at 520 Wickham St in Brisbane‘s Fortitude Valley, to M&G for about $119m.

Meanwhile, private property investment house April Group owns mixed-use assets in Sydney city and fringe markets. It has about $500m of city fringe assets under management and ambitious plans for growth.

32 Carrington Street.

The company also owns buildings in Paddington which are capitalising on the revitalisation of Oxford St. Other key April Group managed assets include Habitat House, Surry Hills and Clarence Place in Sydney. Last year, April Group picked up an office in the inner Sydney suburb of Balmain for $12m.

The Brookfield buildings are being sold via CBRE’s Harry George, Danny Shi and Hugh Thompson and CI’s Mike Stokes and John Bowie Wilson.

They were offered together or individually, with the sale campaign generating significant interest from wealthy investors, locally and offshore. More than $26m was invested in substantial building upgrades, delivering workspaces typically associated with premium-grade buildings. This was reflected in tenant take-up, with 44 per cent of 36 Carrington St leased ahead of the sale campaign, so the building is now full. Agents are hoping the moves on the two buildings open up more sales. Just one asset in this price range has traded in the Sydney CBD core in the past three years.

Occupiers across the two buildings are Airservices Australia, rental housing firm Greystar, energy retailer Smartest Energy, national design-build firm Inscape Projects Group and software producer Alfa.

Both buildings have new foyers with recently completed end-of-trip facilities and new elevators and services, which are well connected to the Wynyard precinct.

No. 36 spans 2,874sq m of lower ground and ground floor retail and upper-level office space over 10 floors, while No. 32 – an example of 1920s Georgian Revival architecture – comprises 2,128sq m of space. Both buildings overlook Wynyard Park.

The buildings have weighted average lease expiries of 4.7 years from 10 tenants in 32 Carrington St and 4.3 years from seven tenants in 36 Carrington St.