Hot property: Brisbane shows spark as office set sail
339 Coronation Dr, Milton in Brisbane.
Singapore’s Keppel Capital is looking to capitalise on the appetite for core-plus offices in Brisbane with the offer of a riverfront building in the fringe suburb of Milton for about $90m.
The city’s office market is showing signs of life, with funds house Quintessential Equity forging ahead with its purchase of 240 Queen St from Canadian giant Brookfield, even as Charter Hall has pulled back from buying the Treasury Casino and Hotel buildings in Brisbane after Star Entertainment Group did not meet conditions.
Listed real estate managers Charter Hall and Abacus Property are also selling the Brisbane Club building, with Aviator Capital circling the $70m-plus asset. Abacus sold 33 Queen St to a private group.
Brisbane last year saw a late run of sales, with Gina Rinehart and Sam Chong buying buildings, but Keppel’s five-level 339 Coronation Drive is the largest office building to hit the market on the city fringe this year.
The complex was picked up by Keppel in 2018 off-market from 151 Property for $40.25m. The sale of the empty building was at an equivalent yield of 8.2 per cent, and the offshore group has repositioned and leased up the bulk of the asset.
It now comprises 13,004sq m of space over two towers on a 5843sq m site, with 305 car bays. The property is being taken to market by Knight Frank’s Justin Bond and Matt Barker.
The block has tenants and when fully leased, net income is expected to be about $7.4m per annum.
Mr Bond said the A-grade building was one of the most distinctive office blocks in Brisbane’s inner western corridor, serviced by Coronation Drive. “339 Coronation Drive is the maiden institutional grade opportunity of 2023 in the Brisbane fringe,” he said.
339 Coronation Dr, Milton in Brisbane.
Mr Bond tipped national and international interest, with Brisbane increasingly on the radar for investors. “The city is expected to experience rapid growth during the next decade due to comparatively affordable housing, lifestyle benefits, a series of upcoming infrastructure projects and, of course, the 2032 Olympics.”
Mr Barker cited recent refurbishments, which included an end-of-trip facility and upgrades to the central atrium, converting it into a new open-air breakout space with a cafe and fitness studio.
Brisbane has already seen some action, with the Centuria Diversified Property Fund selling an A-grade office building in the Hamilton Northshore Priority Development Area to a private investor for $18.5m.
The fully leased property at 381 Macarthur Ave comprises 2846sq m of space on a 2399sq m site and came with a weighted average lease expiry of 2.3 years. Centuria noted the sale price was a less than 4 per cent discount to the asset’s prior book value.
Mike Walsh and Peter Court of Cushman & Wakefield brokered the deal. Mr Walsh said the building had a strategic position in the Hamilton Northshore PDA urban renewal precinct, which spans 304ha.
“From a broader market perspective, we have had a positive start to the year from an activity standpoint. Clearly the market is highly price-sensitive at present and after reaching a nadir at the back end of 2022, there is a renewed appetite and desire to transact from a mix of purchaser groups on the proviso pricing guidance is realistic,” he said.
The firm has more than $180m of mid-market assets in due diligence across the eastern seaboard.
