This article is from the Australian Property Journal archive
SHAYHER Group has confirmed the $199 million acquisition of the refurbished 10 Barrack Street office building in the heart of the Sydney CBD, as investors show some optimism to the future of major cities.
The 13-level A-grade building had been bought in 2017 for $138 million by US-based vendor AEW Capital Management, who spent $7.8 million strengthening the building’s green credentials. It now holds a 5-star NABERS Energy rating, 4.5-star NABERS Water rating and Certified Carbon Neutral by Climate Active.
Located at the corner of York Street, 10 Barrack Street – formerly known as United Airlines House – sits on a 1,040 sqm site with a net lettable area of 9,627 sqm and a 3.5 year weighted average lease expiry.
Among the tenants are Batch Espresso, BTS Spark, Kent Institute Australia, Manhattan Associates, National Breast Cancer Foundation, Pigott Stinson Lawyers and Relationships Australia.
The sale was negotiated through CBRE’s James Parry and Flint Davidson in conjunction with Cushman & Wakefield’s Josh Cullen and Mark Hansen.
Parry said there is substantial buyer interest for well-located Sydney CBD office assets, with the continued strength in the leasing market underpinning strong pricing outcomes.
“With an extensive refurbishment of the building having only just been completed, the new owner will enjoy significant rent reversion over the coming 36 months as existing leases expire.”
Sydney CBD’s vacancy rate came down by 0.5% to 12.5% over the December quarter.
Buyer interest ranged from privates to institutional investors locally and abroad, with purchasers drawn to the super core CBD location, proximity to public transport, and lot size that has become very rare in the CBD.
“The divestment of 10 Barrack Street marks what we believe to be a successful turnaround story, whereby we acquired a well-located property, in an evolving precinct that required a significant capital improvements,” Jason Maxwell, country head of AEW said.
“As a result of the upgrades we’ve implemented, the building has attracted strong tenants on favourable terms, reinforcing the success of the program.”
AEW has also been shopping around the 19 Harris Street building in Pyrmont, with reports suggesting Elanor Investors Group has been close to taking the asset in a $180 million deal. AEW picked up the building in 2018 for $143 million.
Meanwhile, Shayher Group was reported late last year to be in due diligence to acquire the Milton Green office park in Brisbane from property heavyweight Dexus and Sunsuper for $400 million. Milton Green has six office towers and a retail building with 50,000 sqm of space on four hectares.
Also in Brisbane, the Greens have unveiled plans to buy back the Bulimba Barracks site in Brisbane’s inner north from Shayher Group. The developer acquired the site from the Department of Defence in 2019 and has since been seeking amendments to the site’s master plan, intent on developing a community of more than 850 homes made up of five-storey townhouses and detached homes.
Back in Sydney’s in CBD, the 10 Barrack Street sale follows Dexus’s $401 million sale of a 50% interest in 309-321 Kent Street to Hong Kong-listed Liu Chong Hing Investment Limited and Ashe Morgan.
