GPT acquires North Sydney Office Building

GPT has quietly acquired a commercial office building in Walker Street North Sydney as long term development option in Sydney’s second busiest CBD.

In the latest deal, GPT Funds Management has acquired 153 Walker Street North Sydney from Munich based GLL Real Estate Partners and local developer Marprop, who together paid $78m for the property in 2018. The property consists of a 13 storey (56m tall) B grade office building with ground floor retail and an NLA of around 8,928sqm.

Marprop has recently completed a number of upgrades including new lobby, End of Trip Facilities and bathroom upgrades.

GPT has paid $125m for the property, equating to approximately $14,000/sqm.

The deal follows a number of other major acquisitions in North Sydney including;

  • LaSalle Investment Management’s acquisition of 88 Walker Street for $170m
  • Capitaland’s acquisition of 101 Miller Street for $422m
  • Keppel REIT & Lendleases’ acquisition of 2 Blue Street for $165m
  • CBUS & Galileo’s acquisition of 179 Walker Street for $132m

The site at 157 Walker Street benefits from changes to the North Sydney LEP in 2013, which lifted the maximum height for the site to 215m, providing significant future development capacity for GPT.

Marprop did not formally advance any planning proposals for the site during its ownership however in July 2021, the owners of the adjoining strata building at No 153 Walker Street submitted a planning application which incorporated the land at No 157, without the consent of Marprop.

The proposal sought to accommodate a commercial building up to 43 storeys in height across the combined sites and accommodating 52,832sqm of commercial floorspace.

In order to achieve the concept proposal, the applicants also sought to amend NSLEP 2013 by inserting a new local provision to North Sydney LEP 2013 that would effectively result in granting a height bonus of 23m (RL 215 to RL 238).

The application was rejected on a number of grounds, including that the applicant had not obtained the consent from Marprop to the application.

In August 2020, Marprop had however offered to acquire 100% of the strata units in the property at valuation. Negotiations continued over the following 12 months and the strata owners obtained submitted a valuation from Colliers (12 months later) indicating a site value of $70.0m, which was curiously determined on the basis of a development across the combined sites as opposed to just on No 153. Marprop appear to have rejected their proposal.

In February 2022, the Strata applicants submitted a request to the Department of Planning for a rezoning review following Council’s refusal to deal with the matter, however this application has since been withdrawn.

There is no indication as to whether GPT have attempted to acquire the Strata building which on its own is left with limited options since the LEP restricts the maximum heights for properties on less than 1,000sqm of land, which is the case for No 153. As a result, the value of the No 153 “as is”, is likely to be well less than $70m.

GPT will be patient but will become the natural buyer of the strata building which if successful, could pave the way for an extensive redevelopment of the combined site.

GPT are yet to provide comments on their acquisition or ambitions for the site.

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