This article is from the Australian Property Journal archive
CENTURIA Capital Group and BlackRock have lobbed the Zenith office complex in Chatswood to the market with expectations of more than $400 million, hoping to capitalise on their upgrades to the building and ongoing demand for commercial assets in northern Sydney.
The listing of the dual-tower A-grade complex quickly follows major moves in the CBD to start off 2019. GPT Group put a 50% stake in the A-grade MLC Centre to the market, potentially worth $800 million, and Charter Hall acquired 10 and 12 Shelley Street in King Street Wharf for $804 million.
Knight Frank’s Tyler Talbot and Ben Schubert, and CBRE agents Michael Andrews and Scott Gray-Spencer are marketing 821 Pacific Highway, which is held in the unlisted Centuria Zenith Fund and a private BlackRock fund paid $279 million for the complex in 2016.
It has a net lettable area of around 44,102 sqm across 21 levels, and achieved 100% occupancy late last year. Tenants include Property NSW, Commonwealth Government of Australia, Lendlease and Sage, with a 4.5-year weighted average lease expiry.
Talbot said the Zenith is expected to receive significant interest from both local and offshore investors.
“The Zenith provides a unique opportunity to acquire a premium landmark asset with a strong tenancy profile and significant untapped growth and value add potential
“The investment will show a purchaser a significant yield premium to both Sydney and North Sydney CBDs, while also capitalising on the continued strong Sydney metropolitan rent growth, driven by increased demand and the Government’s record infrastructure spending,” he added.
Savills data shows A-grade net effective rents in North Sydney are at $650 per sqm for yields of 5.25%, while Sydney CBD A-grade rents range from $980 per sqm to $1,380 per sqm, and premium assets command from $1,265 per sqm to $1,715 per sqm, and respective yields of around 4.75% and 4.57%.
JLL data recorded North Sydney office market net effective rent growth of 2.4% for December quarter and 6.8% for 2018, despite negative net absorption of 19,990sqm in the quarter, while vacancy increased to 8.6%.
Andrews said the office vacancy in Chatswood is at its lowest since the year 2000 at circa 5.5%, and strong demand and no new major commercial projects in the pipeline should see it fall below 5% by 2020.
He said Chatswood has evolved into a dynamic mixed-use precinct, characterised by major commercial, retail and residential developments, while the Government’s continued investment into infrastructure has reinforced the suburb’s position as a major centre on the Sydney’s north shore.
The soon-to-be-completed Sydney Metro is located within 150 metres of the Zenith and will decrease travel time to Barangaroo by 66% to 11 minutes, with trains departing every four minutes.
“We have seen the area becoming increasingly popular amongst multi-national companies due to its unrivalled retail amenity, with over 200,000 sqm of high quality retail being a strong drawcard for corporate tenants,” Andrews said.
Australian Property Journal
