This article is from the Australian Property Journal archive
OFFICE heavyweight Dexus is teaming up with Marquette Properties to repurpose a B-grade office tower in Brisbane’s CBD into a $500 million purpose-built student accommodation facility (PBSA) with 1,200 beds.
The 27-storey building at 41 George Street is being acquired through Dexus’ opportunistic fund series, Dexus Real Estate Partnership (DREP), with 5% of the economic interest held by Marquette Properties. Dexus and Marquette Properties will be joint development managers.
JLL’s Paul Noonan and Seb Turnbull, CBRE’s Bruce Baker and Navigator Property Group’s Tom Phipps transacted the deal.
The $123 million joint acquisition and venture comes as office vacancies remain elevated in the wake of structural changes to the sector such as working from home, while student accommodation demand levels are set to be tested by the Albanese government’s caps on student numbers.
Dexus and Marquette will reutilise the existing structure, centralised lift core and façade at 41 George Street, and the finished product include three floors of resident amenities including gym, yoga, gaming and cinema rooms. It will be the closest student housing to Queensland’s second largest university campus, Queensland University of Technology, and two blocks from the recently announced Griffith University CBD campus, set to open in 2027.
“This transaction demonstrates our ability to leverage the broad set of capabilities across our platform to create value for clients and investors. This includes special situations investing, office development and refurbishment, and the infrastructure team’s deep understanding of the Australian student accommodation sector,” said Dexus Group CEO and managing director, Ross Du Vernet.
As a result of this investment, DREP1 is now fully deployed, having executed 15 investments. DREP2 is currently open for investment and is expected to be substantially larger than DREP1.
Brisbane’s student accommodation market reflects the national situation in which the current pipeline of 7,770 new beds due to come online by 2026 will not meet demand.
Construction of 41 George Street, Brisbane is due to commence in 2024, subject to relevant approvals, with completion expected in 2026.
The development is Marquette’s fourth involvement in a PBSA project in the city’s CBD – the second adaptive re-use.
Toby Lewis, managing director of Marquette, said the 2,811sqm site, cornered by Margaret Street, was ideally positioned to capitalise on the CBD’s evolving educational profile in a city suffering from low supply and high demand for housing.
He said Griffith University’s recent acquisition of the Treasury Building for a new CBD campus enhances a tertiary mix that already includes UQ Brisbane City, QUT’s Gardens Point campus and CQ University.
“The introduction of 1,200 student beds represents a significant boost to supply, representing the equivalent of 12 50 two-bedroom apartments blocks,” he said.
Adaptive reuse of lower-graded commercial buildings is slowly gaining momentum as a means to address chronic housing shortages across the country while dealing with a post-COVID excess of low-grade office space and providing sustainability benefits.
Build-to-rent investment manager Apt.Residential has just $55 million on two historical brick commercial buildings in Sydney’s Ultimo, which it will repurpose into rental apartments and studios. That followed developer Chapter Two unveiling plans to convert a low-grade office building in Brisbane’s inner north into luxury apartments,
On a broader scale, a study by architects Hassell conducted for the Property Council of Australia estimated that about 86 office buildings in Melbourne are “ripe” for adaptive reuse and could be transformed into 12,000 new homes.
