This article is from the Australian Property Journal archive
A SYDNEY city fringe landholding operating as an edge data centre for 20 years has come to market in a boom period for the sector.
The Ultimo property at 549 Harris Street is a four-storey commercial building that was originally a warehouse with large floor plates of over 1,000 sqm and underwent a conversion in 2000 for the incoming data centre tenant Nortel, which was later acquired by Optus.
The asset has been fully leased and operating as a data centre since, with the current deal expiring in 2024 with no further option term.
The building has 5,604 sqm of gross lettable area on a land holding of 1,341 sqm. There is potential to increase the capacity of centre as the site is currently underutilised by Optus and additional power capacity may be available to an incoming operator.
JLL’s James Aroney, Mitch Noonan and Tom Madigan together with CBRE’s Kenny Duncanson, Harry George and Matt Holden, have been appointed on behalf of Fortius to sell the property.
Aroney said the significant landholding and prominent city fringe location will appeal to investors, developers and data centre operators.
Data centres have become a favourite alternative asset class among investors after a surge in interest over recent years. A recent report showed 31% of investors are interested in investing in the sector, with that figure having sat at just 2% in 2018.
“Given the flexible B1 zoning, the investment provides compelling and genuine value add opportunities. For example, repositioning into creative office space with the inclusion of retail will provide a significant rental reversion opportunity when considering passing rents of $350 per sqm,” Aroney said.
“The Pyrmont/Ultimo area has the highest concentration of educated workforce and offers an attractive value proposition when compared to other city fringe precincts.”
A-grade rents in Ultimo are on average 38% below those in nearby Surry Hills.
The city fringe office market currently holds the second-lowest vacancy rate of all office precincts in Australia, remaining in single-digit territory according to JLL.
The property is positioned directly opposite the Powerhouse Museum which is earmarked for a $480 million transformation by the NSW government, and is close to the ABC building, Ian Thorpe Aquatic Centre, Star Casino, the University of Technology and the Sydney Institute of Technology.
Expressions of interest close 24th March.
