This article is from the Australian Property Journal archive
ONE of Sydney’s landmark creative hubs has been listed for sale, offering a chance to pick up a prized office building on the southern fringe of the CBD.
Mercer Property’s Tom Speakman and Matt Davoren, in conjunction with CBRE’s Harry George, have appointed to sell 19a Boundary St Darlinghurst, a converted warehouse home to tenants such as creative agency Collider and celebrity chef Donna Hay.
The fully leased building has a total lettable area of 6,497 sqm, including a ground floor retail showroom, and returns a net annual passing income of $4,380,311.22, derived from a diverse mix of 53 tenants.
A recent upgrade included a new lift, new paint works, end-of-trip facilities and updated amenities. There is also secure parking for up to 51 vehicles.
George said the low vacancy rate on the city fringe had contracted for the third consecutive year to circa 3%, underpinning interest in assets that offer strong fundamentals and a diverse tenancy mix.
He said commercial buildings in Darlinghurst are in high demand but rarely brought to market.
“19a Boundary Street also offers significant upside, with scope for a considerable uplift in the existing rents and potential for a future exit strategy via a strata subdivision,” he said, while conversion to a boutique hotel could be another possibility given the property’s location.
The rental reversion potential is expected to be one of the key draw cards, with the building offering an average gross passing office rent of $770 per sqm.
“The building’s tenancy profile has the potential to provide either an owner occupation opportunity or allow an incoming purchaser to rework a large portion of office space,” Speakman said.
“Leasing to a single, whole building tenant or whole floor tenancies offers the advantage of picking up an additional 15% of net lettable area – all while bringing rents up to market.”
The building was repurposed as office space in early 2000 and offers character features such as high ceilings, polished concrete floors and exposed services.
Speakman said the Sydney market is experiencing above-average demand for heritage and creative stock.
“As the lines between work and play continue to blur, occupiers are increasingly looking to grow their businesses and retain talent in creative commercial spaces such as 19a Boundary Street, which are surrounded by superior amenity and new restaurant and bar concepts.”
Recent major deals on this side of the city have included AEW’s acquisition of 19 Harris St, while MTAA acquired the office component of 100 Broadway in Chippendale for $77.14 million in December on a yield of 5%, and Marks Henderson bought the refurbished warehouse style building at 19 Foster St, Surry Hills for $39.5 million, on a passing yield of 4.8%.
Developer Landream paid more than $200 million last summer to acquire a 1.2-hectare former council depot in Pyrmont from the City of Sydney.
Last year, Google purchased the Seven Network site Pyrmont for a figure believed to be around $150 million, substantially adding to its footprint in the area. In the Darling Island precinct, the, building is across from the workplace6 building that Google currently occupies. The Seven Network has moved its head office to Redfern’s Australian Technology Park later this year.
Google has taken all 22,000 sqm at 1 Darling Island Rd occupied by Fairfax Media.
