Prominent 100% Government Leased CBD Office Building for Sale
The landmark Henty House office building in Launceston’s CBD is being offered for sale by Sydney-based property investment company STRADA Group.
18 May 2022
CBRE’s Melbourne Capital Markets Office team of Tom Ryan and Scott Orchard in conjunction with Tim Johnstone and Scott Alexander of the Hobart-based Edwards Windsor have been appointed to manage the Expressions of Interest campaign.
The timing coincides with a post-pandemic resurgence in the Launceston region - and Tasmania more broadly - evidenced by continued growth in Gross State Product, population expansion and historically low unemployment.
The five-level, 1 Civic Square property was purpose built for the Tasmanian Government and is leased to both state and federal government departments, offering a weighted average lease expiry (WALE) of close to seven years.
CBRE’s Tom Ryan said, “The building offers flexible, quality office accommodation for all tenant types and has a demonstrated tenancy track record, underpinned by its strategic, central CBD location. It’s also been very managed and has benefitted from strong capital expenditure investment, with $2 million in building upgrades and improvements completed over the past five years.”
Tim Johnstone of Edwards Windsor noted that quality Tasmanian investment opportunities were challenging those in mainland Australian CBDs, with unprecedented capital flows in recent years given the state’s appealing returns.
“The economic background is highly conducive for continued strong investment into Tasmania, with the state benefiting from annual residential home growth, low unemployment and jobs creation, dwelling starts and retail expenditure,” Mr Johnstone said.
Henty House’s various government occupiers include Health and Human Services, Justice, Treasury and Finance, Premier and Cabinet, Police, Fire and Emergency Management in addition to the Federal Government on a new 15-year term.
Located in the central Civic Precinct, the property neighbours government occupied buildings near Royal Park and the Tamar River waterfront.
It occupies a 2,517sqm site, provides a net lettable area of 4,678sqm and generates a net annual income of more than $1,500,000. In addition to recent capital expenditure, a multi-million-dollar tenant fit out upgrade is imminent.
CBRE’s Mr Orchard said the sale campaign coincided with a distinct shortage of quality office investment offerings and enhanced demand for robust tenancy profiles post the pandemic.
“Henty House will allow prudent investors to capture very attractive returns which will reflect a big arbitrage in context to the current 10-year Government bond rate. The replacement cost alone of this asset also makes the investment case incredibly compelling,” Mr Orchard said.
CBRE recently sold the mixed-use Parliament Square development in Hobart for around $330 million to Spirit Super in the state’s biggest commercial property transaction. Underpinned by tenants such as the Tasmanian Government, the yield on the office component was 4.3%.
The Expressions of Interest campaign for Henty House concludes on Thursday 9th June at noon, with the property expected to transact on a yield in the 6% to 6.5% range.
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