Excess capital is budding up office values in North Sydney as future development opportunities are hard to find.
In the latest transaction, Burcher Properties has sold 107 Mount Street for $115m, well above the $90m expected for the asset. On the passing income, the sale represents a 3.9% yield however as the site is one of the few remaining sites in North Sydney with extensive redevelopment potential, the unnamed Asian purchaser was forced to bid higher with 25 underbidders in the market.
The fully leased 6,675 sqm building has a relatively short lease term and could also benefit from the jump in office rents in the area providing a short term lift in the passing income, however the long term opportunity for the site is to take advantage of the 31,500sqm of potential GFA on the site.
There remains a significant amount of capital in the market for well located income producing assets with future development upside and 107 Mount Street is a classic example of the type of asset being hunted down.
Elsewhere in North Sydney, ISPT, Mirvac, Dexus and Stockland are all chasing other B grade buildings in Walker Street which currently has buildings of 5-10 stories, but following recent LEP amendments now have capacity for 45 – 50 storey towers. Stockland are sitting on 110 Walker Street and are examining development options, whilst Dexus have acquired a blocking stake in a strata building, believed to be 121 Walker Street.
Knight Frank and CI Australia handled the sale for Burcher Property.
Related Articles
