Prime time for top end of Sydney office market
The top end of Sydney’s office market has sprung to life with a series of deals being done early in the year and institutions keen to secure assets bidding on the remaining stock.
Major owners are capitalising on improving rental conditions with towers that offer strong growth and the potential for repositioning.
In one of the latest plays, the life insurance arm of financial services company Challenger is quietly looking to sell its Clarence Street office tower that is worth close to $300 million.
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The group has tapped Rob Sewell and Paul Noonan of JLL and Rick Butler and Josh Cullen of Inc Re to a run a process for select institutions to buy the A-grade office building at 35 Clarence St.
The offer of the building in the western corridor of the Sydney CBD is likely to set a benchmark as the flurry of Sydney buildings that sold in the second half of last year were mainly B-grade blocks.
The multi-tenanted complex is likely to draw interest from German and Japanese institutions, as well as the Hong Kong tycoons that have set the pace in Sydney over the last period.
Formerly The George Patterson Bates building, it has 20 storeys, with two floors of retail and 16 floors of office space. It was completed in 2000 by Bob Ell’s Leda Properties and spans a net lettable area of 15,422sqm after being refurbished in 2012. Challenger Life bought the tower for $137.1 million in 2015 and has since repositioned the asset but declined to comment.
Elsewhere in the city, Charter Hall has struck a deal to take full control of a tower in Market St valued at just under $600 million as insurance group Allianz exits its half stake in the building and readies to head to new premises.
Charter Hall is exercising rights to buy the half of the tower and would then lease the complex at 2 Market St as Allianz vacates its 18,909sqm of space. The firm declined to comment.
The next major race in the city is for property and private equity house Blackstone’s half stake in Westpac’s Sydney HQ in Kent St that could trade for more than $800 million via JLL and Savills. A heavy domestic field rumoured to include GPT, ISPT and Charter Hall is facing off against the likes of JPMorgan Asset Management and Singapore’s GIC Real Estate in that contest.
This article originally appeared on www.theaustralian.com.au/property.
