Sydney’s suburbs are heating up with a string of office sales marking increased attention and broken records.
The recent acquisition of The Zenith Centre in Chatswood saw US heavyweight Starwood Capital and Sydney-based Arrow Capital Partners join forces to claim a new top prize for the Sydney suburban office market.
The building was held by Centuria Capital and BlackRock, who originally took ownership in 2016 for $279 million. Taking advantage of the increased interest in assets of this class, they were able to negotiate a $438 million deal for the Zenith complex.
Centuria’s head of real estate and funds management, Jason Huljich, revealed that 10 offers were received, showing the depth of demand for office buildings of this scale.
The A-Grade office property offers twin towers, each of 21-storeys and with basement parking. The site presents an opportunity for the new owners to explore further redevelopment.
“We like the North Shore office market, and Chatswood in particular given the limited supply, robust demand and transformative infrastructure improvements that are underway.” Starwood Capital vice president James Fogarty said.
The Zenith purchase is Starwood’s second Sydney acquisition with Arrow Capital Partners in the past 18 months. In late 2017 the duo teamed up to acquire an office block in St Leonards from the Melbourne-based Wingate Group for $160 million.
The Chatswood sale is not the only record broken of late. Dexus made a splash earlier in May with the purchase of 80 Collins Street in Melboure’s CBD for around $1.48 billion. The landmark development site is recorded as the city’s largest trade ever.
Dexus also made the news earlier in March securing the final 50% stake of Sydney’s iconic MLC Centre for $800 million, granting it 100% control of the asset.
Queensland, South Australia and Western Australia have also recorded major sales of a similar nature.
Brisbane has also seen two A-Grade office towers reach sales of over $100 million. Australian property development and investment group, KYKO, picked up 201 Charlotte Street for $126.7 million, while only a few weeks later, Makerston House was sold for $103 million.
Growthpoints picked up an A-grade West Perth building (Wellington Central at 836 Wellington Street - previously owned by Investa Office Fund) for $91.3 million.
Adelaide also saw records break with Charter Hall transacting on the state capital’s largest commercial deal of 2019 so far. The investment property group secured 121 King William Street from private equity group Blackstone for $82.25 million.