This article is from the Australian Property Journal archive
BRISBANE’S active CBD office investment market will face an early year test after a blockbuster 2018, with the listing of an A-grade commercial office tower in the city’s Golden Triangle precinct anchored by global coal giant Anglo American.
Fortius Funds Management and two private funds managed BlackRock have appointed Justin Bond of Knight Frank and Flint Davidson of CBRE to market the 13,291 sqm A-grade 201 Charlotte Street tower.
On a 1,839 sqm site with 149 car bays, it also benefits from its close proximity to nearly $13 billion of major CBD infrastructure projects.
The tower has a weighted average lease of expiry of 5.1 years. Anglo American is the world’s third largest metallurgical coal mining company, with a market capitalisation in excess of $40 billion, and recently recommitted to the property until 2028.
Bond said investment interest had been strong in Brisbane over the past few years, particularly for CBD assets, with market fundamentals including infrastructure investment, population growth and a strengthening economy attracting buyers, along with the affordability of the city compared to its southern counterparts.
The location of the building, right in the heart of the Golden Triangle, Brisbane’s key financial hub, 41-metre frontage to Charlotte Street, were also drawcards, according to Davidson, as is the property’s close proximity to all the major CBD infrastructure projects in Brisbane, with $12.8 billion in developments within a one kilometre radius. These include the Cross River Rail, Queen’s Wharf, and Dexus’ Eagle Street Pier redevelopment.
Given the list of major players that have made key moves in the CBD in and inner-city market recently, the asset is expected to attract the attention of local and offshore capital.
Knight Frank data suggested interest from foreign investors has propelled annual sales figures in Brisbane upwards from the $366.9 million seen in 2015 to $1.75 billion of deals realised over the 12 months to September, while CBRE recorded around $1.2 billion of sales in Brisbane through September quarter alone, second in the country only to Sydney.
Since then, Growthpoint Properties Australia acquired the 100 Skyring Terrace office tower in Newstead on the city fringe from Charter Hall for $250 million. Charter Hall itself paid $275 million to QIC Global Real Estate for the 17-level tower at 61 Mary Street, while Centuria Metropolitan REIT and Lederer Group teamed up for the acquisition of the Hines portfolio that included the 825 Ann Street and 100 Brookes Street assets in Fortitude Valley.
Meanwhile, Singaporean group ARA Asset Management and US funds manager Heitman have reportedly been dealing with Canadian group Quadra Pacific on its 133 Mary Street and 288 Edwards Street towers respectively.
Charter Hall has entrenched itself as the major player in Brisbane. Mid-year, acquired an amalgamated Queen Street Mall site known as No 1. Brisbane, weeks after its Charter Hall Long WALE REIT and Charter Hall Direct PFA Fund picked up the 11-storey 40 Tank Street office building. The funds teamed up again in October to buy the Capital Hill building at 85 George Street for $60 million.
The group now owns the most Brisbane CBD office assets by number, and together with Dexus – the largest CBD owner by net lettable area – the major landlords now control around 23% of Brisbane CBD office buildings of more than 5,000 sqm in net lettable area.
Other key transactions over the past year have included JPMorgan Asset Management acquiring 53 Albert Street in the CBD from financial services firm Challenger for $250 million-plus, while Mirvac secured Asia Pacific core fund M&G Real Estate as a 50% joint venture partner for its $836 million 80 Ann St tower, and Singapore’s Rockworth Capital Partners acquired the 100 Edward St office tower.
Bond said 201 Charlotte Street is predominantly surrounded by heritage buildings, ensuring excellent natural light and view corridors.
The owners recently undertook a multimillion-dollar refurbishment, with the building transformed to provide contemporary workspaces with bespoke finishes, as well as an overhaul of the street level entry foyer and an improved food and beverage amenity and new end of trip facilities.
Bond said the infrastructure pipeline in Brisbane was contributing to a maturation of the Brisbane investment market, boosting confidence for buyers considering investing in the city, along with an improving vacancy rate.
Brisbane is expected to see further rental growth of 2.4% in 2019, following 2.5% growth in 2018, while a flight to quality among tenants pushed A-grade vacancies down from 11.7% to 9.9% over the six months to January, with net absorption of 16,537 sqm. The CBD saw the biggest firming of vacancies of all capitals in the period, coming down from 14.7% to 13.0%.
Australian Property Journal
