North Sydney in big tower boom
Sydney’s office tower boom is spreading through the city after a series of big-ticket deals in the central business district and an Asian investor swooping on a North Sydney office block for about $115 million in the latest play.
The deal reflects both the extraordinary pricing for the area and its rerating on the back of construction of the forthcoming Metro station and a wave of new towers that have drawn tenants ranging from Nine Media to Microsoft.
The Asian group grabbed the nine-storey office building at 107 Mount St, which had been tipped to sell for more than $90 million, against stiff opposition as 25 bidders chased the building.
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The 6675sqm building carries a relatively short lease term and could benefit from the jump in office rents in the area.
It could also become, in future, the site of a new skyscraper as the building could be demolished to make way for a 34-level office tower.
Knight Frank and CI Australia handled the sale for Burcher Property. They did not comment but the sale would show a yield of about 4% — leading to valuation jumps for the surrounding precinct.
Investors are also snapping up mid-size buildings as the cost of purchasing city towers has soared out of reach for all but the largest institutions, with domestic groups including Dexus, GPT, Charter Hall, and ISPT all big buyers of towers in Sydney this year.
North Sydney is one of the strongest performing office markets in the country, with further strong growth forecast over the coming years.
New buildings are under way by private developer Winten and also by listed companies Lendlease and Dexu as the area prepares for the Sydney Metro to open in 2024.
Dexus has already bought a stake in a strata building in Walker St, North Sydney, that could make up part of a site for a new skyscraper.
Mirvac is also trying to buy out another strata tower in Walker St in order to build a new block in North Sydney.
Now attention is turning to the impending sale of the 14-level building known as 2EP that sits near the planned Metro station and the Central Laneways nexus. It is on the block for an estimated $120 million.
BlackRock tapped Cushman & Wakefield and CI Australia to sell it after buying it two years ago from Marprop Real Estate Partners for $81m.
The field could be further bolstered as buyers who missed out on the Burcher block chase this building.
This article originally appeared on www.theaustralian.com.au/property.
