This article is from the Australian Property Journal archive
THE Chatswood Central commercial complex has hit the market, offering investors a substantial lower north shore landholding and a 56-year ground lease.
The 3,806sqm site at 1-5 Railway St, next to Chatswood Station, comprises two office towers linked by a retail podium, and is subject to a ground lease to Taverners Value Fund Pty Ltd.
JLL’s John Macree, Gordon McFadyen and Steven Tsang are marketing the property on behalf of Property NSW, part of the state government’s Department of Finance, Services and Innovation.
JLL research shows there are no office developments currently under construction in Chatswood, and prime gross effective rents jumped by 3.1% in the first quarter of 2017 for a 10.8% year-on-year increase. They are expected to show growth of 3.5% over 2017, and yield compression of 25 basis points by the end of the year.
Macree said ground leases are rarely offered to the market, but are an extremely attractive asset class.
“In this case an investor/purchaser will have the benefit of a secure cash flow for 56 years, and at the end of the lease will have multiple exit or redevelopment options,” he said. “As such we anticipate to see strong interest from a cross section of the investment market and expect to set a new pricing benchmark with the sale of this ground lease.”
McFadyen said demand for investments in Chatswood and across the North Shore had increased notably in recent years as the retail, commercial and residential identity of the area has matured.
“Chatswood’s office market has been a beneficiary of tenant displacement in the nearby areas of St Leonards, Crows Nest and North Sydney,” he said. “While vacancy is expected to remain stable throughout 2017, there is a higher number of occupiers now looking to Chatswood as a destination. Its dual retail offering is also a strong drawcard for businesses wanting to provide their staff with a connected environment,”
In recent weeks cruise company Carnival Australia signed an eight-year lease over 3,500sqm of office space within the 15-level 465 Victoria Avenue building, just metres from Chatswood Central.
The expressions of interest campaign for Chatswood Central closes on June 28th.
Australian Property Journal
