This article is from the Australian Property Journal archive
WITH price expectations exceeding $140 million, Brisbane’s A-grade HQ South Tower has entered the market, amidst rising interest in the city’s office market.
HQ South in Fortitude Valley, around 1.6km north east of the CBD, sits on a 3,017sqm site and boasts 45 metres of frontage to Wickham Street and 62 metres to Brookes Street.
Peter Chapple, Tom Phipps and Stuart McCann from CBRE, in addition to Justin Bond, Paul Roberts and Neil Brookes from Knight Frank have been appointed to manage the sale via an expressions of interest campaign, on behalf of M&G Real Estate.
“With an income profile anchored by a global infrastructure construction consortium, HQ South offers excellent medium-term lease rental income with timely exposure to Brisbane’s population and infrastructure growth trajectory,” said Chapple.
The building includes 2,250sqm floorplates around a central core configuration and features a 6-Star Green Star design, a 5-Star NABERS Energy Rating and a 4-Star NABERS Water Rating.
“HQ South is Brisbane’s maiden core-plus opportunity of 2022 and is expected to generate strong interest due to its multiple medium-term value enhancement opportunities while offering occupiers highly desirable office amenity,” added Chapple.
The tower currently includes CPD Contractors, the Australasian arm of CIMIC Group, as its major tenant. With the contractors, that are currently delivering the city’s $6.9 billion Cross River Rail project, occupying 61% of the total 14,588sqm NLA.
Tenants also include RPS Australia, AH Jackson & Co and Next Medical Practice, in addition to retail tenants across the tower’s fully integrated 1,503sqm retail plaza.
“We believe this asset is an outstanding example of a building that holds broad appeal to investors and businesses alike given its commitment to modern and environmentally-focused amenities accompanied by rich retail and food services in the immediate proximity,” said Bond.
Bond cited lifting COVID-19 international border restrictions as boosting investor interest in Brisbane’s office market.
In Brisbane’s CBD office market, total sublease volumes were recently reported as falling below 25,000sqm for the first time in three years, while for January the total market vacancy rate in the Brisbane CBD was at 15.4%.
“Domestic and offshore investor appetite, driven by upcoming developments in Fortitude Valley and Brisbane’s burgeoning infrastructure pipeline, will result in significant demand for this rare opportunity of acquiring a core-plus asset in Fortitude Valley,” said Bond.
The expressions of interest campaign for HQ South is set to close at 5 April.
At the same time, Fortitude Valley’s Green Square South Tower is being offered for sale by AXA Investment Managers, with an initial yield mid-7% range expected.
These two offerings comes after $800 million worth of offices were put on the market last week.
Phipps and Chapple will also manage the sale of the tower via an international expressions of interest campaign, along with colleague Bruce Baker, Seb Turnbull and Paul Noonan from JLL.
“Interest is being further spurred by Brisbane’s development boom, with approximately $26 billion worth of inner-city infrastructure and major projects in the pipeline or underway and a significant additional boost anticipated following the awarding of the 2032 Olympics hosting rights,” said Phipps.
The 505 St Pauls Terrace campus style building was completed in 2007, with its 17,618sqm of office and retail space across five-levels fully leased to Brisbane City Council.
The Cox Architecture-designed institutional grade asset includes 2,000sqm-4,600sqm floor plates, 355 car bays and was Queensland’s first Green Star certified project.
“The building is situated in the heart of the Fortitude Valley Core commercial precinct, approximately 75m from Fortitude Valley Train Station, providing excellent tenant amenity and connectivity. It also occupies a massive 6,426sqm site – offering three street frontages and significant redevelopment potential of up to 20 levels under the current neighbourhood plan,” said Turnbull.
The site’s secure government lease income and effective lease structure providing cashflow with no outstanding incentive and 4.0% annual increases, will see the passing yield reach circa 9% by the end of the lease term.
The expressions of interest campaign for Green Square South Tower is scheduled to close on 31 March 2022.
