A North Sydney development site in McLaren Street has been sold to Stadia Capital for $80m.
The 2,359sqm site at 41 McLaren Street is directly opposite Victoria Cross Metro Station’s northern entrance and offers 8,400sqm of office space above basement parking for 91 cars.
The existing seven-storey Harry Seidler-designed office building has a heritage listing but still has the potential for further development.
In 2017, developer and part owner Erolcene, gained consent for a Gateway Determination to amend the LEP to accommodate a 41-storey residential tower however North Sydney Council challenged the Gateway determination and the matter was referred to the state’s Independent Planning Commission.
In June 2019, the Commission determined that the planning proposal had strategic merit but not site-specific merit, “given the significance of impacts likely to result from the bulk and scale of the residential tower.”
North Sydney Council subsequently made it clear in the Ward Street Masterplan that the site would not be awarded any additional height due to the overshadowing and the reduction in solar access likely to occur on public open space proposed under Council’s draft Ward Street Precinct Masterplan.
Erolcene subsequently sold the site to NS McLaren Developments Pty Ltd in May 2020 for $31.5m.
“It’s such a prime site and a significant sale for an ever-growing and improving part of North Sydney,” Mr Chomley said.
“The opportunity exists to undertake a major refurbishment of the building as well as potential for further development.”
“North Sydney is a dynamic precinct that is currently in the midst of the biggest infrastructure and development boom in its history. With significant uplift in investor and occupier demand, North Sydney has almost become an extension of the CBD and is set to continue to flourish.”
The previous owners also prepared a development scheme which retains the existing heritage building and allows a potential six-level office addition.
It is unclear yet whether Stadia will attempt to gain approval for an alternative design or re-position the existing asset, however a low rise A Grade asset with premium finishes in close proximity to the Metro and the proposed plaza is likely to be a viable proposition to typical North Sydney tenants.
“We are currently assisting the purchaser with their future plans for the asset, which includes an exciting development scheme incorporating the existing Seidler building with brand new prime grade office space,” said Director in Charge Sydney North Dan Walker.
“The upper floors will feature harbour views to the south east, and given the position of the asset close to the new Metro entry and flowing onto the future Ward Street Plaza, we expect this to attract high-calibre occupiers when this is launched to the market in due course.”
The sale is one part of a major revitalisation in North Sydney, with three major developments currently underway. No. 88 Walker St will provide 11,700sqm of NLA and is due for completion in October 2022 through Billbergia, the corner of Blue St and William St (recently acquired by Keppel REIT & Lendlease) which will provide 14,961sqm of NLA and the Victoria Cross development, which is situated above the new metro station and is being developed by Lendlease, will provide approximately 56,000sqm of NLA.
There are a number of additional towers seeking development approval, including 64,000sqm at 110 Walker Street, 42,835sqm at 100 Walker Street and 33,000sqm at 107 Mount street.
At a purchase price of under $10,000/sqm, the acquisition or 41 McLaren Street stacks up well against recent deals including EG Funds acquisition of 32 Walker Street for $12,865/sqm, Dexus’ sale last week of 201 Miller Street at $10,616/sqm and Intera Groups’ acquisition of 65 Berry Street for $14,608/sqm.
With some additional repositioning costs, Stadia are well positioned to attract typical North Sydney tenants who are looking for affordable accommodation in close proximity to public amenity.