This article is from the Australian Property Journal archive
A prominent fully-leased mixed-use office and retail building on one of the most expansive land holdings in Surry Hills has hit the market.
Known as Reservoir on Crown, 285a Crown Street, located on the corner of Crown and Campbells street around 1km south-east of the Sydney CBD, is being sold by a LaSalle Investment Management-managed fund.
Paul Roberts, Jonathan Vaughan, Tim Holtsbaum and Dominic Ong from Knight Frank, alongside Mitch Noonan, Luke Billiau, Sophie Tieman and James Aroney from JLL are managing the sale of the property via an expressions of interest campaign.
“The building has recently been future proofed, having undergone a recent capital expenditure program minimising future expenditure requirements,” said Roberts.
Built in 1960 and redeveloped by Mirvac in 2009, the 3,058sqm site comprises a total net lettable area of 4,727.6sqm, with 3,671.4sqm of office space across two floors, 1,056sqm of retail space and 15 secure car parks.
The asset is also placed in one of the country’s best performing markets, with the city fringe of Sydney seeing annual net face rental growth average of 5.9% per annum over the last decade, according to JLL Research.
While Surry Hills itself has seen an annual net face rental growth rate of 8.5% over the same period, the CBD fringe market is perfectly suited to meet the needs of office occupiers as the workforce emerges from COVID-19 lockdowns.
The 11 diverse tenancies at the site include The Commons, Intercom Software and The Winery by Gazebo, for total occupancy and a WALE exceeding six years, with annual fixed increases.
“It offers value-add options for buyers too, including the potential for further rental reversion or the opportunity to subdivide the existing winery and café from the main building to sell to an owner-occupier or investor,” said Roberts.
In addition to the security and growth provided by these tenants, the large site also offers potential buyers with ample future development opportunity.
“With historically tight supply and a limited development pipeline in Surry Hills, there may also be an opportunity to strata subdivide the entire property, or take advantage of tangible development potential for a further two floors with an estimated 1,500 square metres of additional net lettable area,” added Roberts.
Roberts also noted that Reservoir on Crown, as one of the largest stand-alone buildings on one of the largest sites in Surry Hills, could stand to take advantage of the recent planning proposal for Oxford Street (LINK).
The property is underpinned by its strong fundamentals such as its positioning and prominence, quality, on-site and surrounding amenity and its protected views of the Sydney CBD.
“Fringe assets of this scale and quality are extremely rare, and are typically very tightly held by generational owners in Surry Hills, so we expect this asset will be very well received by investors looking to get exposure to the City Fringe market,” added Noonan.
The expressions of interest campaign for Reservoir on Crown is scheduled to close on 26 May, 2022.
