Sydney CBD building overlooking Darling Harbour listed: Savills

A fully leased commercial office building in Sydney’s CBD and overlooking Darling Harbour is set to hit the market, while another opposite Hyde Park has been listed.

The building at 160 Sussex Street is a renovated 15-storey office asset comprising 8,269.6 sqm of net lettable area on an 853.6 sqm site.

The building was constructed in 1992 and has an elegant heritage façade while incorporating modern office accommodation.

It last traded for $51.2 million in 2015, according to Corelogic RP Data.

It offers a Weighted Average Lease Expiry (WALE) of 3.26 years (by income) with a net income of nearly $4.6 million.

Vacancy rate in the Sydney CBD office market has remained the lowest among the national capitals, helping drive strong growth in both capital values and rental growth, according to the latest research data from Savills.

With vacancy currently at a low of 5.9 per cent and expectations of further tightening over the next two years as net supply remains negative, rents have grown in double digits over the past two years and risen to record levels, according to Savills, which is partnering with Colliers International to market the freehold B-Grade commercial office building. 

Given forward indicators and a distinct lack of short term supply, this trend appears to have further to run, while investor demand for quality assets remains strong in the Sydney CBD, particularly from Asian investors, despite concerns over tightening capital controls.

The marketing is being done by Graeme Russell, Simon Fenn and Ben Azar of Savills and Vince Kernahan, Tom O’Neill and James Barber of Colliers International.

The property is being sold through an expressions of interest campaign closing November 2.

The vendor is local property investor, Stephen Burcher, of the Burcher Property Group.

The property is fully leased with major tenant Education Centre of Australia (ECA) occupying 46 per cent of the building. Other major tenants include Rankin Ellison Lawyers, Fortinet International, Dual Australia, Trippas White Group, Turner Freeman Lawyers and Health Care Australia.

The CBD's Western Corridor precinct where the building is located has the highest net effective rental growth, according to Graeme Russell of Savills Australia.

“What is happening within the Western Corridor precinct is changing the dynamics of the Sydney CBD. New construction worth billions in office, residential, hotel, transport, infrastructure and entertainment developments in the area gives Sydney a new focal point," said Russell.

“The commitment by both public and private sectors promises that this precinct will bring a new standard of working and living to the area with 160 Sussex Street perfectly positioned to benefit from this development activity” he said.

Vince Kernahan of Colliers said more than $6.5 million has been spent on services and refurbishment works throughout the building since 2012.

Meanwhile, a freehold corner office tower opposite Sydney CBD’s Hyde Park has also come to the market.

Located at 299 Elizabeth Street, on the corner of Elizabeth and Liverpool streets, the property offers access to major retail destinations such as World Square, Westfield Shopping Centre, QVB, Chinatown and Darling Harbour Live.

The building comprises nearly 5,974 sqm of net lettable area with ground-floor retail space. It is nearly fully leased.

It also has direct access to the underground Liverpool Street entrance to Museum Train Station. 

The listing agents are Knight Frank’s Dominic Ong, Andy Hu and John Bowie Wilson along with JLL’s James Aroney and Steven Tsang.

They are acting on behalf of a private Asian investor and the property will be sold via an international expression of interest campaign starting September.

Knight Frank’s Dominic Ong said investment demand was extremely high in the Sydney CBD. 

“There remains a lot of capital chasing solid assets in Australia. We are expecting interest from local and offshore buyers, including syndicates and high net worth individuals,” he said.

“The high profile corner is directly opposite Sydney’s Hyde Park and is an appealing investment package due to its current level of occupancy and diversity of income through the retail and commercial tenancies,” added JLL’s James Aroney.

The building recently underwent a $1.55 million upgrade and is nearly fully leased – primarily to legal occupiers – due to its proximity to the Local & District Court within the Downing Centre.