This article is from the Australian Property Journal archive
CANADIAN giant Brookfield is shopping around Alan Bond’s former 108 St Georges Terrace tower in Perth with expectations of more than $350 million.
The 51-storey tower was developed by Bond in 1988 and his ill-fated business’s offices were headquartered across its top three levels. It is currently 87% occupied with a weighted average lease expiry of 3.6 years, with key tenants include global mining and metals company South32, ASX-listed financial services firm Pioneer Credit, Asia’s third-largest office space provider The Executive Centre, and global law firm Norton Rose Fullbright.
The tower offers 38,332 sqm of A-grade office accommodation and expansive views over the Swan River, Kings Park and the wider Perth metropolitan area. Brookfield has spent over $100 million making improvements since acquisition 15 years ago.
It is complemented by the three-storey, 1897-built heritage-listed Palace Hotel, a fully refurbished character-style building used for offices and conference facilities with a ground floor hospitality space operated by Meat and Wine Co.
There are modern end-of-trip facilities and 103 basement car bays, and the asset is on a sizeable 3,891 sqm corner landholding on the city’s busiest intersection of St Georges Terrace and William Street.
It is across from 140 St Georges Terrace, which the AMP Capital Diversified Property Fund sold for $260 million to Primewest and Blackrock last year after 111 years of ownership.
JLL’s Simon Storry, John Williams and Luke Billiau together with CBRE’s Aaron Desange, Michael Andrews, Flint Davidson and Nicholas Volk have been appointed to sell 108 St Georges Terrace, which is also known as the South32 Tower.
“International investors are actively seeking strategic assets across Australia’s CBDs, particularly high-quality office product in key locations,” Storry said.
“With the re-opening of international borders, we are seeing new capital sources emerge, and the removal of domestic travel restrictions has been hugely positive for the Perth office investment market.”
Desange said 108 St Georges Terrace represents prime core CBD real estate with an opportunity to produce core plus returns.
“The building will be regarded by international investors as a trophy asset and will undoubtedly attract capital being deployed in Asia Pacific.
No single occupant represents more than 25% of the property’s income stream allowing for the retention and expansion of existing tenants within the building, he said.
“This aligns well with the likelihood of constrained office supply from 2025 to 2027 helping support future rental growth prospects.”
According to the Property Council, Perth’s office vacancy rate is at 15%, its lowest reading since July 2015. In contrast, JLL data shows the CBD recorded positive net absorption of 9,300 sqm in the March quarter – the strongest quarterly net absorption result since the last three months of 2018 – but the vacancy rate remains elevated at 19.7%.
Expressions of interest close 29th June.
Elsewhere in the city, Brookfield is developing Chevron’s future headquarters One The Esplanade Perth, for which it recently received a $450 million green development loan – the largest of its kind in Australia – and multiple lots at Elizabeth Quay.
The offering of 108 St Georges Terrace comes as ARA Asset Management shops around 81 St Georges Terrace with hopes of more than $90 million,
