Maville Bay exits North Sydney as office pressures rise

Supplied Editorial Maville Bay has sold 116 Miller St and 173 Pacific Hwy in North Sydney

Maville Bay has sold 116 Miller St and 173 Pacific Hwy in North Sydney

Chinese-backed Maville Bay has sold two adjacent commercial properties in North Sydney for close to $90m in a sign of the shifting values in the area.

The sale of 116 Miller Street and 173 Pacific Highway to another Asian group is the latest to reflect the fall-off in values in the key market, which is struggling to absorb space as a series of new towers are either getting built or are in planning.

Maville had bought the properties from property syndicator Property Bank Australia, Security Capital Corporation and RG Property for $133.8m in 2017 and had won approval for a 33- level building on part of the block directly opposite the Victoria Cross Metro station.

But it dropped its plans and instead struck a deal to exit, in a sign that suburban office markets remain tough and investors are still shying away from North Sydney.

The two properties – an office and retail investment – occupy a site totalling 2304sq m. The Miller Street block is an eight-storey A-grade office and retail building, with retail on the ground floor and seven levels of office space above. The refurbished property has 10,098sq m of net lettable area and is occupied by blue-chip tenants including ANZ Bank and Commonwealth Bank on short leases.

The Pacific Highway asset is a vacant four-storey office building that was previously occupied by long-term anchor tenant Australian Catholic University. It is now a development site, with approval for 10,000sq m of office space. Alternatively, it could be considered ripe for a build-to-rent scheme, with plans already drawn up.

Knight Frank is brokering the deal but declined to comment.

The agency had billed the property as a chance to acquire commercial assets with diversified income at 116 Miller Street and value-enhancement initiatives for both buildings, underpinned by the development potential.

The Miller Street block was 66.4 per cent leased and had a weighted lease expiry of 1.38 years by income. The estimated fully leased net income for 116 Miller Street is $9.35m, with strong rental growth history.

A build-to rent scheme was also prepared by architects Woods Bagot for 142 apartments and 12,090sq m of residential and retail area, subject to council approval.