This article is from the Australian Property Journal archive
THE City of Brisbane Investment Corporation (CBIC) is offloading a refurbished Parramatta CBD office building occupied by the NSW government that returns more than $3 million in rent each year when fully let.
CBIC bought 9 George Street with an eye to upgrading the 5,479 sqm building. At the time, major tenant Manpower, part of Australian Defence Recruitment, was set to vacate the building within months.
CBIC was able to attract the NSW government to a long-term lease shortly after Manpower’s exit, then undertook a refurbishment program that included modernisation and upgrades to foyers, bathrooms, BMS and HVAC, improving the building’s NABERs Energy rating to 5 stars.
Occupation is now sitting at 91.4% with a weighted average lease expiry of 2.92 years. Fully let income is $3,051,692.
“We believe that CBIC’s investment in the building over recent years will be very well received by the market,” CBIC chief executive Kirsty Rourke said.
“We have executed our modernisation strategy that has improved the amenity for occupiers and increased the building’s NABERs ratings, enabling us to retain tenants such Watts McCray and Macquarie Bank on new leases over recent months”.
John McCann and James Girvan of Colliers have been appointed to sell the building.
McCann said the building has always leased well and had a “sticky nature” when it comes to retaining tenants, with a strong track record of tenancy renewals, some of which have occupied the building for over 10 years.
Girvan said, “9 George Street is a rare offering that provides a core, stabilised asset with an exceptional tenancy profile that also provides genuine rental growth given its building quality and its location to the legal precinct”.
In May, the Australian Unity Diversified Property Fund sold off the 7,532 sqm, eight storey Parramatta office building at 20 Smith Street for over $87 million, at about 4.5% above book value. Twelve months ago, Parramatta Council paid $64 million for the 7,650 sqm building at 9 Wentworth Street that will become its administrative headquarters from 2023, while at the end of last year Australian Unity Office Fund offloaded the B-grade, 6,759 sqm 32 Phillip Street for $66 million, at 5% above book value and with a new 10-year lease to GE Capital Finance following a refurbishment.
Parramatta’s office vacancy rate has jumped to about 19%, according to the Property Council of Australia, amid a surge in new office supply, although projects including Lang Walker’s Parramatta Square continue to attract major tenants such as the ABC.
Scentre Group has received state government approval for its $500 million proposal to build a 105,000 sqm office tower above Westfield Parramatta, while the NSW government also committed to overhauling planning controls for Parramatta’s CBD, aiming to create 50,000 new jobs and two million sqm of new commercial space in the process.
