This article is from the Australian Property Journal archive
ONE of Wollongong’s major commercial buildings has hit the market for the second time in just over three years, offering six levels of office space fully occupied by government tenants.
The seven-level A-grade building at 90 Crown Street has 9,171 sqm of net lettable area and serves as the regional headquarters for the federal government’s Services Australia and NSW government’s Transport Department.
It includes ground floor retail accommodation of 1,703 sqm, featuring tavern Mr Crown, and 160 car spaces over two levels on 3,755 sqm of land.
The property is being taken to the market via an expressions of interest campaign run by Knight Frank agents Ben Mostyn, Dominic Ong and Tyler Talbot on behalf of the vendor, Avari Capital Partners.
Avari Capital Partners paid $50 million for the asset at the end of 2018, which at the time was a record price for a commercial building in the regional centre. That 3transaction represented a yield of 7.75% when the building had a weighted average lease expiry of 3.5 years.
Mostyn said the sale campaign was expected to attract interest from a wide range of buyers, including overseas investors, institutions and private wealthy individuals.
“We describe this well-known property as the crown jewel of Wollongong – it’s Wollongong’s trophy asset,” he said.
“For investors this property coming onto the market provides a rare opportunity to purchase a fully-leased, A-grade government-anchored quality asset in one of Australia’s strongest performing office markets.”
Mostyn said 90 Crown Street’s blue-chip covenant is a huge drawcard, with 100% of the building’s office space occupied by government tenants, but it’s location is also attractive, being centrally located at the epicentre of Wollongong’s CBD and on the city’s “best commercial block”.
“This asset is positioned amongst the best retail and entertainment amenities Wollongong has to offer whilst also providing excellent access to the public transport network.”
Ong said office market conditions in Wollongong continued to go from strength to strength, with the growth in businesses and local jobs due to solid economic fundamentals.
Property Council data showed tenants took up an nearly 9,000 sqm of extra space across Wollongong’s A- and B-grade sectors in the 12 months to January.
“Intense competition for core assets in major CBD locations has led to significant capitalisation rate compression throughout Australian commercial office markets,” Ong said.
“Although buyer demand has expanded into metropolitan areas, core market yields in regional areas such as Wollongong provide real value.”
He said there is the opportunity to increase the underlying income of the asset through a potential addition to gross floor area and expanding the tenant offering.
The expressions of interest campaign will close on 17th March.
A block over, a 2,007 sqm corner parcel proposed for a 4.5-star, 241-room hotel rising 13 levels was put to the market a year ago. The car dealership property was leased on a short-term deal in the middle of 2021.
