This article is from the Australian Property Journal archive
DIVERSIFIED property group Quintessential Equity snapped up a landmark office building in the Adelaide CBD for $73 million from Australian Unity Office Property Fund.
As previously reported by Australian Property Journal, the 30 Pirie Street asset was purchased off-market within Quintessential Equity’s third commitment fund, Master Fund No. 3, with the transaction settling on 20 December 2022.
Max Frohlich and Justin Bond from Knight Frank, alongside Paul Van-Reesema and Alistair Mackie from Colliers, introduced Quintessential to the vendor.
“We are thrilled to have acquired 30 Pirie Street, a premium office building perfectly placed to capture demand for prime contiguous spaces. The acquisition allows us to build on our longstanding reputation and continued investment in Adelaide, growing our presence within a core CBD location,” said Shane Quinn, executive chairman at Quintessential Equity
The building will undergo a significant refurbishment program, updating the asset both aesthetically and mechanically, with a CAPEX budget of around $30 million.
“With over $30 million of upgrades planned to regenerate the building we intend to elevate the building to market leading in a prime CBD location. With Adelaide’s office market continuing to deliver strong returns, 30 Pirie Street will provide a high-quality income stream and exceptional tenant experience,” added Quinn
The planned works will include major upgrades to the ground floor lobby, end-of-trip facilities, tenancy refurbishments and works to modernise the building’s lifts and facade.
Additionally, Quintessential plans to future proof the asset by carrying out various energy efficiency initiatives, including a commitment to reaching a minimum 5 Stars NABERS Base Building Energy Rating.
“The sale of 30 Pirie Street instills confidence in the office market going into 2023 and we will expect to see genuine engagement from equity investors supported with debt solutions, to access the market looking for risk adjusted investments,” said Van-Ressema, director of capital markets & investment services at Colliers.
Currently the CBD office block is fully leased to five tenants, including Telstra who occupy 91% of the building, having leased the site since its construction in 1987.
While Telstra are set to relocate to 60 King William Street, upon its completion, the telecommunications giant will continue to lease a portion of the building into 2023.
“Twelve sales above $10 million have settled in Adelaide CBD since January 2022, reflecting a total sales volume of $441 million, up from a total sales volume of $251 million last calendar year. Around 70 per cent of these transactions occurred prior to the RBA’s first of eight consecutive cash rate hikes in May 2022,” said Frohlich, director and head of institutional sales at Knight Frank, SA.
“However, this excludes five assets which are in due diligence or have exchanged and are yet to settle; including these assets transaction volumes measure approximately $735 million in total.
“Due to the recent sharp rise in interest rates, buyer demand has shifted from core to value-add opportunities where the increased cost of capital can be offset with enhanced returns from active management initiatives. 30 Pirie Street is another great example of this.”
