Acure is buying 67 Albert Avenue in Chatswood.
Sydney’s suburban office market is being dramatically reset with more than $400m worth of transactions in train across major centres and more deals in the works likely to confirm the slide.
Fresh sales are being struck in hubs including Parramatta, St Leonards, and Chatswood, with more activity on the city’s north shore to come, showing that values have not recovered after the shock of the pandemic.
The transactions, struck by listed groups, developers and offshore investors, will reverberate through the market as other landlords mark their portfolios down.
Institutions have now shifted focus to chase assets in the central business districts, leaving a mix of private buyers and syndicators to return to suburban markets.
However, the fall in values shown by the recent run of selling is in keeping with expectations, showing that liquidity remains for well-leased assets, with buyers also willing to bet on a turnaround.
Listed property giant Dexus struck the largest sale of late, quietly offloading a major Parramatta tower, with more assets to come to market.
Dexus and its office partner, Canada’s CPP Investment Board, sold 101 George Street in the western Sydney hub for about $145m in the largest finalised suburban deal. They are now readying to bring a block in Sydney Olympic Park to market.
Dexus has sold office towers across Parramatta and the north shore.
The Parramatta block was sold to private company Sandran Property Group. The parties declined to comment but the buyer has an extensive track record across the nation’s suburban and regional office markets.
The Paramatta deal was brokered by Colliers’ John McCann, Adam Woodward, and James Mitchell and CBRE’s James Parry and Mitch Noonan.
The A-grade office building spans about 18,100sq m and is anchored by the Department of Home Affairs.
The vendors held the asset at about $154m on a market capitalisation rate of 7.5 per cent.
The buyers of suburban assets are keen to capitalise on the emerging lack of supply of new office space which is expected to support rentals in coming years.
Fund manager Acure Asset Management is buying two A-grade office buildings on Sydney’s north shore for a new unlisted fund for $278m in total, according to documents obtained by The Australian.
It is buying 558 Pacific Highway in St Leonards from its developer, Chinese-backed company JQZ, for $170m.
The 17,394sq m complex has 14 levels and the price shows a yield of 9.47 per cent.
That is being handled by Colliers’ Matthew Meynell and Tyler Talbot and CBRE’s Mitch Noonan and James Parry.
Acure is also buying the 67 Albert Avenue in Chatswood from Singapore’s Mapletree Investments for $108m.
The 15-level complex spans 14,686sq m of space. It is about 81 per cent occupied and major tenants include the NDIS, CMC Markets and Link Housing.
The Chatswood deal will show a 10.4 per cent initial yield. Mapletree had bought the building from RF CorVal for $158m in 2018.
The Chatswood sale is being brokered by Cushman & Wakefield’s Jack Harrison and Mark Hansen and Colliers’ Mr Talbot and Mr Mitchell.
Acure told prospective investors that the new trust was a “compelling opportunity” to secure institutional-grade offices with embedded rental growth and multiple value creation opportunities through active asset management.