Office Sale

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An owner occupier has paid $445,000 for a strata office property at Malvern East in Melbourne’s inner east.
The 2004 Malvern Road auction secured $5300 a sqm.
The auction drew several bidders from a crowd of predominantly local owner-occupiers and investors.
The property comprises a fully self-contained, 85 sqm, strata office/retail premises with rear access via a right of way to two secure on-site car spaces and access to ample street parking. 
It was listed for rent as recently as May last year.
The vendor was a local private investor.
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Owner occupier bags Malvern strata office

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A not-for-profit aged care provider has purchased a building on Bridge Street in Sydney's Epping for $18.65 million in a deal brokered by Savills Australia and PropertyFox.
Sitting at <a href="https://www.realcommercial.com.au/property-offices-nsw-epping-501375107" target="_blank">16-18 Bridge Street</a>, the 1989 building has a net lettable area of 3,177 square metres.
It was sold on behalf of Peak Equities, an emerging Melbourne-based fund manager that bought the building for $14.2 million in 2012 from Centuria.
According to Tom Merrett of Savills Industrial &amp; Business Services, the office building was partially occupied and the new buyer intended to occupy the remaining available office space.
“The emergence of Epping as a significant residential hub, and the growing rate of buildings being converted into residential has left Epping with a severe shortage of commercial buildings, which is why the purchaser was keen to lock in an option to accommodate their office requirement for the long term.”  
The building is a short walk from Epping railway station.  
Merrett said he was seeing a lack of leasing and purchase options for commercial tenants looking to occupy space long term all across the upper North Shore of Sydney due to residential conversion.
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Not-for-profit buys office buildings for $18.65m in Epping through Savills

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Charter Hall Group is in exclusive due diligence to acquire the 100 per cent leasehold interest in Macquarie Group's headquarters on Sydney's King Street Wharf precinct for more than $500 million from Brookfield Office Properties. 
The sale of 1 Shelley Street could be one of the most closely watched commercial sales this year and is expected to set new benchmark yields for core property in the CBD. The office tower, next to the Barangaroo development, could sell on a yield of close to 5 per cent, according to a report in the Australian Financial Review.
Charter Hall is likely to tip the 11-storey building into its $2.6 billion wholesale Core Plus Office Fund. CPOF was the top performing unlisted office fund in 2015 with a 20 per cent return and earlier this week bought 130 Lonsdale Street in Melbourne, the AFR said.
The deal, if it goes through, will be the second major office property in Sydney's CBD to sell to a local institutional player this month after the Investa Commercial Property Fund paid $443 million for a majority stake in 420 George Street earlier this month.
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<div>One of the key reasons for Sydney's appeal is the strengthening office market. In the Sydney CBD, the vacancy rate in the March quarter dropped to just 6.8 per cent - the first shift under 8 per cent since the financial crisis, according to global real estate group, JLL </div>
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A Charter Hall spokesman declined to comment when contacted but it is understood to be in the early stages of due diligence. CBRE and Savills, who marketed the property, did not comment. 
Charter Hall beat the competition, including UOL out of Singapore and AMP's wholesale office fund, for the deal.
The Macquarie headquarters is one of two Sydney assets Brookfield put on the market to fund its development pipeline. The other is a half stake in KPMG Tower at 10 Shelley Street but it is understood no party is in due diligence yet, the AFR said.
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Charter Hall Group enters due diligence on Sydney's Macquarie HQ for $500 million

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ASX-listed Centuria Property Funds Limited (Centuria) and global investment firm BlackRock have agreed to jointly acquire an institutional grade office asset in Sydney's Chatswood for $279.1 million.
 
Centuria, which has $1.9 billion in funds under management, said contracts have been exchanged on the Zenith, the 821 Pacific Highway property in Sydney's Chatswood.
 
The purchase remains subject to FIRB approval, with settlement expected to occur in late July.
 
A new Centuria unlisted property fund, the Centuria Zenith Fund, will co-invest with BlackRock to acquire the property.
 
“Sydney’s North Shore office market is already performing strongly, and we expect that it will continue to experience falling vacancies and strong rental growth over the next few years," said chief executive of Unlisted Property Funds, Jason Huljich, adding he was confident the fund would provide attractive returns to investors due to the strong fundamentals of the location and the property itself.
 
The withdrawal of commercial office space in the CBD and North Shore due to residential conversion and the construction of the Metro will drive above trend rental growth and mean excellent total returns for our investor clients."
 
The Zenith has a diversified tenant mix with about 40 percent of its rental income underpinned by government tenants. It is currently 94 percent occupied and has around 44,000 sqm of net lettable area.
 
“In the current low interest rate environment, there’s no question that investors are becoming increasingly yield-driven. Distribution yields from the Zenith Fund are forecast to be 7.6 percent in the 2017 financial year, growing to 7.7 percent in the 2018 financial year. These are very attractive rates for such a high quality asset,” Huljich said.
 
 
 
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Centuria, BlackRock to acquire office property in Sydney's Chatswood

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Two stylish office suites in Sydney’s inner city suburb of Surry Hills recently exchanged hands, one fetching more than $1.5 million and the other going for nearly $700,000.
<a href="https://www.realcommercial.com.au/property-offices-nsw-surry+hills-501949502" target="_blank">Suite 517, 50 Holt Street</a> has a floor area of 142 sqm and fetched $1,565,300. The other, <a href="https://www.realcommercial.com.au/property-offices-nsw-surry+hills-501949514" target="_blank">Suite 512</a>, sold for $660,000. It spans 55 sqm.
Both were sold with vacant possession and are part of 19 suites in the building.
50 Holt Street is the epicentre of the Surry Hills business district with a community of more than 70 businesses, including Cue HQ, ASOS and Guzman &amp; Gomez.
The place is a stone’s throw from Central Station and Prince Alfred Park pool and home to restaurants Porteno, Muum Maam, Di Bella and 121 BC all on the ground floor.
The selling agents are David Brown and Nelson Ferreira of DB Property.
According to the ad listing, there is “a queue of tenants waiting to lease space”, so the suites are expected to be good investment. 
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Stylish office suites in Sydney's Surry Hills snapped up by investors

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The Edgecliff office block - tenanted in part by Prime Minister Malcolm Turnbull as his electorate office - has been sold.
It fetched $15.67 million having been bought from Telstra for $3.865 million in 2001. 
The 287-289 New South Head Road building was formerly the Edgecliff Post Office, a landmark building at the busy corner.
It was offered by the Scarf family as a rare opportunity to own a freestanding, mixed use property.
It is a freestanding, four storey, mixed use property, offered fully leased with a NLA 1,405 sqm.
Its net income was $955,144.74 pa.
There was secure car parking for 15 cars plus a large outdoor deck area with harbour views.
The initial marketing by Ray White Double Bay suggested there was future potential for residential conversion.
It was bought by the Spyrides family from Vaucluse. 
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Malcolm Turnbull gets new office landlord in Edgecliff

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An investor has paid $820,000 for a Hawthorn, Melbourne office suite through Teska Carson’s Tom Maule. 
The property, 12-14 Cato Street, features a 193 square metre office suite with an open plan layout, meeting room, and board room, and six under cover car spaces. It was sold subject to a monthly lease at $4315 a square metre.
Tom Maule said strata office suites in the most desirable inner suburbs were very popular with small investors, including SMSFs, and owner-occupiers.
"These type of properties are very popular with a host of buyers looking for a more attractive yield than is available with other investment classes at the moment, particularly with borrowing rates so low," he said.
"The property attracted quite a good level of interest due to the very high standard of accommodation in what has historically been a very desirable address for both commercial and residential users."
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Investor snaps up Hawthorn office suite

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A standalone office building in South Melbourne has sold for $5.5 million.
 The freehold building at <a href="https://www.realcommercial.com.au/property-offices-vic-south+melbourne-502307034" target="_blank">9-11 Palmerston Crescent</a> was sold with vacant possession having last traded for $1.1 million in 2008.
Its land area is 476 sqm with a floor area of 711 sqm.
The two-level fitted office building has potential for further development subject to council approval.
The zoning is Commercial 1. 
It is close to the new Domain train station. 
The selling agents were Michael Ryan, James Gregson and Joseph Walton of Allard Shelton.
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Office building in South Melbourne with development potential changes hands for $5.5 million

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Listed property group Dexus has entered into an agreement to acquire the landmark heritage office building in Sydney’s Pyrmont for $327.5 million, the largest office transaction in the suburb’s history.
Dexus agreed a 100 percent freehold stake in <a href="https://www.realcommercial.com.au/property-offices-nsw-pyrmont-502222974" target="_blank">100 Harris Street</a> at a fully leased yield of 5.4 percent. Among its tenants are co-working platform WeWork and Fairfax’s Domain. 
Originally a wool store from the 1890s, the refurbished heritage property comprises 26,879 sqm of A-Grade office space over six levels. 
The property sits on a 7,791 sqm site with frontages on both Harris Street and Pyrmont Street.
The sale was negotiated on behalf of Citi 100 by JLL’s James Aroney along with Karbon Property’s Joshua Watts. The property is owned by Ukrainian born property developer Michael Teplitsky.
Included in the offering is 130 Harris Street, to the south of the existing building, with new office and retail space and car parking.
The development will provide retail space fronting Harris Street is expected to be completed by October. 
The agents said demand for 100 Harris Street reflects an international movement to refurbished unique assets, with creative locations such as South of Market in San Francisco attracting a higher rate per sqm and tighter yields than their counterparts in the CBD.
The movement is following the trend of the tech industry that value brick and timber large floor plate workspaces, they said.
<img src="https://www.urban.com.au/images/2017/06/21/HarrisSt2.png" alt="">
Karbon Property’s Joshua Watts said that Pyrmont is viewed as an extension of the CBD. 
100 Harris Street offered buyers an attractive weighted average lease expiry (WALE) of 7.6 years, he said.
“As a significant contributor to the Sydney fringe market, Pyrmont has been experiencing continuing strong rental growth, outperforming other office markets around the country,” Aroney said.
The Ukrainian-born property developer Michael Teplitsky listed its with expectations it could fetch $330 million.
<img src="https://www.afr.com/content/dam/images/g/v/x/a/i/4/image.imgtype.afrArticleInline.620x0.png/1493701254988.jpg" alt="100 Harris Street - AFR USE ONLY! NO OTHER USE ALLOWED." width="620" height="404" data-src="/content/dam/images/g/v/x/a/i/4/image.imgtype.afrArticleInline.620x0.png/1493701254988.jpg">
Pyrmont is the technology hub of Sydney mirroring many international technology hubs including San Francisco’s South of Market, New York’s Meatpacking District and London’s Shoreditch where WeWork also has a presence.
<img src="https://www.afr.com/content/dam/images/g/v/x/a/i/7/image.imgtype.afrArticleInline.620x0.png/1493701161551.jpg" alt="100 Harris Street - AFR FIRST USE ONLY! MAY 2017" width="620" height="914" data-src="/content/dam/images/g/v/x/a/i/7/image.imgtype.afrArticleInline.620x0.png/1493701161551.jpg"> 
Meanwhile the listed property group Dexus will raise $500 million for the purchase of a stake in Sydney's tallest office tower. 
Dexus will take a 25 stake in the MLC Centre at 19 Martin Place for $361.3 million with its wholesale property fund taking the other quarter share. 
The 68,289 square metre MLC tower at Martin Place was placed on the market by QIC Global Real Estate in March.
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Dexus to buy Teplitsky's Pyrmont building for $327.5 million

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Propertylink has entered into a contract with ARA Australia and Straits Real Estate to sell 320 Pitt Street Sydney for $275 million.
Sale completion is slated to occur July 2017.   
The sale price represents a 12.2 percent premium to current book value.
Propertylink purchased the property in partnership with Grosvenor Group and Goldman Sachs in June 2015 for $200 million on an acquisition yield of 8.27 percent.
<img src="https://www.urban.com.au/images/2017/06/06/Screen%20Shot%202017-06-06%20at%2010.50.05%20AM.png" alt="">
Peter McDonald, Propertylink's head of property said the building is leased to Telstra until 2020. 
"While there was no requirement to divest the asset at this stage, we have been very pleased to realise a superior outcome for our investment partners," he said.
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