CBRE’s Harry George, Kenny Duncanson and Scott Gray-Spencer have been appointed to market the 28 suites in the prominent city strata building.
Developers have been using the new planning strategy to buy up 25 per cent blocks in a number of buildings across the city to shore up future development opportunities.
The sale provides a strategic opportunity to acquire a blocking stake in the building.
CBRE’s Harry George
It comes as Sydney’s office vacancy rate sits at a record low of 3.9 per cent and despite a number of new projects under construction, most have been pre-leased. This has made snaring an interest in an office tower very attractive.
Dexus Property, Mirvac and Lendlease have ear-marked the northern end of the city as the next development phase for the central business district.
Dexus executive general manager, office, Kevin George said, at the group’s interim results on Thursday, the December 2019 quarter has seen increased inquiry levels across a range of industries compared to the previous corresponding period.
“We expect that continued solid employment growth in Sydney and Melbourne combined with positive conditions in the business services sector will positively influence occupier demand over the next 12 months,” Mr George said.
Mirvac’s chief executive Susan Lloyd-Hurwitz said as Sydney CBD’s office market moves past the trough in vacancy, “our young, low capex portfolio with 96 per cent of assets either prime or A-grade is well positioned to continue to experience sustained demand”.
“The sale provides a strategic opportunity to acquire a blocking stake in the building, giving the new owner a seat at the table in a future super tower development site,” CBRE’s Mr George said.
“The strata lots could potentially form part of a longer-term, 3200 sq m development site stretching from Angel Place to Hunter Street, which has been identified as one of the CBD’s next potential super sites.”
The Draft Sydney Planning Strategy promotes increasing building heights of up to 300 metres, providing a minimum site area threshold is met.
With tenants demanding larger floorplates, Mr George said greater site areas were considered critical for the success of core Sydney CBD developments, with several super towers already being developed in the immediate area – including Circular Quay Tower, Quay Quarter Tower and 210 and 220 George Street.
Notwithstanding future development scenarios, CBRE’s Mr Duncanson said the sale provided an opportunity to capitalise on the underlying strength in the Sydney office market by acquiring strata lots with a combined lettable area of 3123 sq m.
“Historically low interest rates, low supply growth over the past decade and a significant weight of capital seeking to invest in Sydney is driving interest in CBD investment opportunities,” Mr Duncanson said.
“In the case of 109 Pitt Street, the building is situated in the city’s financial core and is surrounded by premium office towers. Refurbished in 2018, the property benefits from its proximity to Pitt Street Mall, the new light rail and from a through site link to Hunter Connection, which provides off street connectivity to Wynyard Station.”
The B-grade commercial building, also known as Randstad House and Hunter Arcade, was constructed in 1963 and offers 20-storeys of office accommodation and ground level retail, positioned on a 1329 sq m site.
The 16 owner-occupied suites being offered for sale on leaseback arrangements.
Carolyn Cummins is Commercial Property Editor for The Sydney Morning Herald.