Investors tipped to circle Perths first significant office investment opportunity in 2020
Investors tipped to circle Perth's first significant office investment opportunity in 2020
| 26 February 2020
A city fringe office building at 59 Parry Street has been listed for sale, providing Perth’s first significant office investment opportunity for 2020.
CBRE’s Kate Foley and Ben Younger have been appointed to steer the Expressions of Interest campaign for the four-level, A-grade building, which comprises ground floor retail and three upper levels of office accommodation.
The asset provides a net lettable area of 2,949sqm in addition to 38 car bays. While strata titled, it is being sold in one line – providing significant future upside for an incoming owner.
“The property benefits from a diverse tenancy mix, with the opportunity to add value through leasing up the existing vacancies, carrying out additional works and considering multiple future exit strategies,” Ms Foley said.
“The building’s strategic location in Perth’s north eastern city fringe will be another buyer draw card, with significant development occurring in the area in the past few years. Investor confidence in the precinct has also been underpinned by recent transactions such as Dorado’s acquisition of the adjoining 12 Newcastle Street.”
Constructed in 2010, the modern building has a 1.9-year WALE by income.
It provides a net passing income of $700,000, with the opportunity to lift the income to approximately $1.3 million on a fully leased basis.
Mr Younger said the sale campaign was expected to generate interest from investors seeking value add opportunities in growth markets.
“The Perth office sector is currently the highest effective rental growth market in Asia Pacific and is set to deliver rental growth averaging 10.2% over the next five years,” Mr Younger said.
“The city fringe is a particular area of opportunity, with the market currently underpriced. While prime assets on the fringe have historically achieved effective rents at a 17% discount to the CBD, they are currently 40% less than the CBD – highlighting significant upside for savvy landlords.”
Mr Younger noted that the take up of high-quality city fringe office space would increase as the CBD vacancy continued to shrink.
“Tenants will be drawn to the city fringe due to the affordability, amenity, convenient access to road networks and public transport, and the fact that outgoings are lower than the CBD,” Mr Younger said.
Higher car parking ratios will be another draw card, as highlighted by the fact that 59 Parry Street has a car parking ratio of 1 bay:78sqm, whereas the CBD average is 1 bay:150sqm.
Ms Foley added; “Perth’s city fringe also offers a significant yield premium, with a differential of 180bps to eastern seaboard fringe markets on average. This is well above the long-term average of 50bps to Sydney’s city fringe, and 90bps to Melbourne’s city fringe; making the Perth city fringe office market a compelling value proposition, particularly given expected improvements in the leasing market.”
Expressions of Interest for 59 Parry Street close Thursday, April 2.
For Australian/international news or global stories, follow us on Twitter: @cbreaustralia
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.