This article is from the Australian Property Journal archive
A LOCAL private syndicate has acquired an Adelaide building for $14.2 million in the biggest settled CBD office transaction for more than a year.
The five-level 104 Frome Street building traded on a 6.88% yield.
The building’s floorplates have been substantially renovated and it offers 4,387 sqm of office net lettable area, with 53 on-site car parks on a 1,693 sqm site providing a passing income of $977,177 with a 1.86-year weighted average lease expiry..
It is close to the amenities of Rundle Street, Hutt Street and the eastern Adelaide Parklands.
JLL’s Ben Parkinson and Jack O’Leary sold the property on behalf of a local private investor.
“The sales campaign resulted in more than 100 enquiries, reflecting a renewed interest in the Adelaide office market and the strong economic performance of South Australia,” Parkinson said.
He said the price point was attractive for a range of groups, including private investors, local and interstate syndicates and owner-occupiers, as it represented strong value considering the current construction costs.
“Increased construction costs and increased interest rates have impacted development feasibilities and therefore good quality existing stock, at these pricing levels, provide an attractive purchasing opportunity.”
O’Leary said South Australia has a “robust” local private investor market, which has helped underpin the office sector during market downturns by seeking countercyclical buying opportunities.
Occupier centralisation from suburban office locations is expected to continue driving net absorption in the CBD, according to JLL. Its data shows occupier demand in the Adelaide CBD rebounded in the first three months of 2024, with quarterly net absorption recorded at 10,965 sqm. The prime grade net absorption figure (13,993 sqm) drove higher headline net absorption in the quarter, with secondary grade net absorption recorded at negative 3,028 sqm.
As well as centralisation, the positive net absorption figure was also driven by expansionary activity by occupiers in the public administration and safety and administrative and support services sectors.
O’Leary said demand for well-located prime buildings is likely to persist over the medium-term as amenity is a key driver to attract workers into the office while driving efficiencies to achieve net zero targets.
