A prime 1,550sqm office space on Sydney’s city fringe has been successfully leased as education tenants continue to target the region throughout the covid recovery.
The previously two vacant floors of 9B Education space at 54 Parramatta Road in Forest Lodge attracted two new education tenants on five-by-five-year leases, with the deals secured by Justin Rosenberg of Colliers.
Both tenants had education facilities outside of the CBD fringe and this was their first location within the fringe market. With 54 Paramatta Road having on-site parking, street frontage, easy connectivity to the CBD and public transport, as well as having an already built-in education fit out, the offering met both tenant’s requirements perfectly and therefore transactions moved swiftly.
The gross rent achieved was a 17 per cent increase compared to what it was previously marketed at, with both leases being signed within three months of the new owner taking over the property.
“With the market still bouncing back from COVID and occupiers navigating through new office/work from home strategies, it’s a really significant deal that shows how popular the city fringe has become with a range of industries interested,” Mr Rosenberg said.
“The fringe has continued to benefit from increased enquiry in technology, education, creative and media sectors, largely due to the point of difference their suburbs bring compared to the regular CBD and North Sydney markets.”
The platform for this success was laid by selling agents James Cowan and Vince Kernahan, who sold the asset to the Master Builders Association for $20.5 million and immediately engaged Nathanial Barbagallo and Elissa Dunlop of Colliers Real Estate Management (REM) to facilitate an outgoings and facilities management audit, as well as Justin as the leasing agent. This resulted in significant cost savings and improvements to the return for the owner.
“This is a sensational city fringe asset expected to benefit from government infrastructure upgrades in close proximity, and we are very pleased to have unlocked the entrapped value via a collaborative effort between Colliers’ sales agents, leasing agents and real estate management. This effort has ensured genuine, and valuable, uptick in value in a very short period of time,” Mr Cowan said.
Both A and B grade average net face rents have remained stable over the first quarter of 2022, Colliers Research shows. However, over the last 12 months A-grade assets has seen an uplift in average net rents of 3.4 per cent with low vacancy in key fringe areas and increased demand giving owners the confidence to rebase their asking rents.
On top of this, Enquiry for office space in CBD Fringe has increased during the first quarter of this year, compared to Q1 2021. The largest number of enquiries were for space between 300-400 sqm.
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