North Sydney development opportunity arises

A North Sydney office building has been listed for sale by 12 strata owners seeking to capitalise on a higher and better use for the building, amid a rising focus on the adaptive reuse of office buildings in Australia’s major CBDs.

Located at 12 Mount Street, the nine-level commercial building has the potential to be converted into residential apartments. The property is expected to sell for circa $40 million. 

CBRE’s Ben Wicks, James Parry and Angus Windred are managing the sale via an Expression of Interest campaign closing 28th March 2024. 

“Without substantial upgrades or capital expenditure, commercial buildings built in the 1960s and 1970s no longer satisfy the needs of tenants,” Mr Wicks said. 

“The softening in commercial values and increase in vacancy levels is providing an opportunity to obtain vacant possession to redevelop. We are seeing a growing number of building owners - both in Australia and globally - turning to adaptive re-use, choosing to repurpose existing buildings to better uses such as residential apartments, in favour of doing a knockdown rebuild.”

“Due to the properties prime position in North Sydney CBD, Sydney Harbour and Bridge views and solid demand for residential apartments in the area, we are expecting buyer interest from experienced local developers. 

The property has potential for holding income and vacant possession from January 1st, 2025. The potential development will likely retain its existing superstructure and basement car parking.

Mr Windred added, “With limited available residential stock, and existing commercial strata buildings becoming increasingly costly to manage and requiring significant capital upgrades, we are seeing an increase trend in owners banding together to sell as an amalgamation.”

“Due to the changing dynamics of the commercial landscape, we are currently experiencing a push for a greater mixed-use environment in this space which could inject a new breed of investors to the Sydney CBD and Metro markets and see redundant buildings turned into valuable accommodation which Sydney needs.”

The focus on potential office conversion is also evident in Melbourne, a recent Property Council Study found that vacant office buildings in Melbourne’s CBD have the potential to be transformed into apartments, leading to the creation of up to 12,000 new homes.

The study, conducted by architecture firm Hassell on behalf of the Property Council of Australia, found that subject to individual feasibility studies, approximately 86 office buildings are suitable for adaptive reuse.