Ultimo data centre comes to the market for the first time in 20 years

A significant landholding operating as an Edge Data Centre for 20 years has come to market, as the sector continues to grow amid the e-commerce boom.

549 Harris Street, Ultimo is a substantial four-storey commercial building, comprising 5,604 sqm of GLA on a substantial land holding of 1,341 sqm.

JLL’s James Aroney, Mitch Noonan and Tom Madigan together with CBRE’s Kenny Duncanson, Harry George and Matt Holden, have been appointed on behalf of Fortius to sell 549 Harris Street, Ultimo via an Expressions-Of-Interest campaign, closing on Thursday 24 March 2022.

The property, originally a warehouse with large floorplates of over 1,000sqm, attractive façade with abundant natural light, underwent a conversion in 2000 for the incoming Data Centre tenant Nortel, which was later acquired by Optus. The asset has been fully leased and operating as a Data Centre for the past 20 years. The lease expires in 2024 with no further option term providing purchasers with future optionality and significant rental reversion.

Mr Aroney said, “The significant land holding, and prominent City Fringe location will appeal to both investors, developers and Data Centre operators. Given the flexible B1 Zoning, the investment provides compelling and genuine value add opportunities. For example, repositioning into creative office space with the inclusion of retail will provide a significant rental reversion opportunity when considering passing rents of $350 per square metre.

“The Pyrmont/Ultimo area has the highest concentration of educated workforce and offers an attractive value proposition when compared to other City Fringe precincts. A Grade rents in Ultimo are on average 38% below those in Surry Hills,” said Mr Aroney.

The City Fringe office market has defied the COVID-19 market downturn and currently holds the second lowest vacancy rate of all office precincts in Australia, remaining in single digit territory according to JLL Research as at Q4 2021.

Mr George said, “The precinct is underpinned by infrastructure and amenity. Opportunities of scale in this precinct are rarely traded and the incoming Metro West Station and Powerhouse Museum redevelopment will further support future growth.”

The market for data centres is thriving across Asia Pacific. The Australian market is competitive with a mix of well-established groups and new-to-market operators capitalising on the recent domestic growth of the sector.

This Edge Data Centre has the potential to increase its capacity, as the site is currently underutilised by Optus and there may be additional power capacity that is available to an incoming operator. 

The property is positioned directly opposite the Powerhouse Museum which is earmarked for a $480 million transformation by the NSW Government and is within close proximity to the ABC building, Ian Thorpe Aquatic Centre and Star Casino. The University of Technology and the Sydney Institute of Technology are within 800m of the asset. In total, the NSW State Government has committed to spend $2.5 billion in infrastructure development within the precinct.