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Roxy Pacific and Tong Eng Group capitalise on strength of Sydney CBD market

Property Markets / Transactions

Australia / Sydney

Mar 02 2018

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The impact of recent stock withdrawals for residential conversion and the Sydney Metro has led to unprecedented demand for B Grade office space in the Sydney CBD.
 
According to research from Savills Australia, the subsequent spike in rents, coupled with limited opportunities to purchase investments, has driven yields down for B Grade assets as local private and institutional money and offshore capital try to secure assets to take advantage of the tenant demand and genuine effective rent growth.
 
In light of this, Roxy Pacific and Tong Eng Group are set to sell a quality B Grade commercial building in the heart of Sydney’s Western Corridor, a precinct that is undergoing a vast transformation both commercially and culturally. The precinct is fast becoming a regional centre for Asia Pacific’s financial services leaders as well as offering an array of small bars and fine dining options.
 
Positioned some 120 metres from Wynyard Station and Bus Interchange, 117 Clarence occupies a large corner site of over approximately 1,231 sqm and offers 11 storeys with three street frontages and total Net Lettable Area of approximately 12,521 sqm that delivers strong natural light throughout the building. The building has undergone a series of capital upgrades including advancements in the lift rides and door mechanisms as well high quality end of trip facilities (bike racks, showers and change rooms).
 
The property is exclusively for sale through Simon Fenn, Ian Hetherington and Ben Azar of Savills Australia and Richard Butler, Josh Cullen and Steven Kearney of Inc RE and offers a short Weighted Average Lease Expiry (WALE) of approximately 2.60 years by income (as at June 2018) providing significant reversionary uplift and a potential amalgamation opportunity incorporating adjoining owners.
 
Approximately 60 per cent of leases within the building expire before 2020 and 41 per cent of income is underwritten by Government. The building has a 4.5-star NABERS Energy rating.
 
According to Simon Fenn, Managing Director of Savills NSW, “117 Clarence Street is ideally positioned to capitalise on the strength of Sydney’s leasing market, especially the growth of rents in B Grade office assets; the unprecedented demand for investment-grade assets with development upside as well as the improvements being made in the Western Corridor”.
 
Mr Fenn said the building offers significant rental reversion and with long term development potential, will attract strong interest from both domestic and offshore capital.
 
According to Richard Butler, Partner at Inc RE, “the property sits between Brookfield and Partners massive Wynyard Place redevelopment and Barangaroo to the West and is well leased in the medium term but on a large piece of land which in its own right could potentially be redeveloped in the next cycle”.
 
100 per cent freehold interest in 117 Clarence Street, Sydney is for sale through Savills Australia and Inc RE with Expressions of Interest closing mid April 2018.

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