Stockland snaps up North Sydney towers in $121m deal


Stockland chief executive Mark Steinert said the acquisitions are in the heart of the North Sydney business district, “which continues to strengthen and enjoys strong institutional interest”.

“These acquisitions will increase our exposure to the strong office market, with a view to unlocking additional future development potential for new office and street-level retail.”

North Sydney is undergoing a significant transformation.

Louise Mason

Office space in North Sydney is in high demand from an increasingly wide range of tenants due to its strategic location, relative affordability and access to transport, according to the latest research from Knight Frank.

The Knight Frank North Shore Office Market Overview September 2019 found North Sydney was particularly attractive to technology and media companies with these tenants accounting for 34 per cent of leasing activity since 2018.

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“Strong demand from tech companies is expected to drive positive take-up levels over the next two years in North Sydney,” said Knight Frank partner and head of office leasing North Shore Giuseppe Ruberto.

“Microsoft, SAP, Nextgen.net, Nokia, Citrix and Zurich are a few recent examples of companies trying to scale and set up headquarters in the area.”

North Sydney’s office vacancy rate, formerly in the double digits, now sits at about 6 per cent. The area had a redevelopment phase, with older office towers being converted into apartments.

Mr Ruberto said the new Sydney Metro rail project and planned pipeline of new office projects in the area was providing a further uplift to demand levels and resulting in new market entrants.

“North Sydney’s office rents are running at a 27 per cent discount – on a gross basis – to the Sydney CBD, which has continued to support recent demand fundamentals,” he said.

While rents in the North Sydney office market are more affordable than the CBD, they are gradually catching up, with rising tenant demand leading to rental growth rates higher than the Sydney CBD, according to the Knight Frank research.

But with the Sydney CBD at record low vacancy, tenants are heading back over the Harbour Bridge in droves. Dexus has built and leased 100 Mount Street to NBN, while the Nine Entertainment Co – the owner of this publication – is moving to the new 1 Denison tower in mid to late 2020.

Stockland chief executive commercial property, Louise Mason, said demand and supply fundamentals for workplace assets along the east coast remain strong.

“North Sydney is undergoing a significant transformation, with infrastructure investment including the new Victoria Cross Metro Station development driving increased tenant demand for the precinct,” Ms Mason said.

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