The 10-storey Edison Exchange building in the heart of Brisbane’s “golden triangle” precinct will hit the market for the first time.
Telstra developed the 10-storey commercial building in 1963, and still owns the property to this day.
The property will be sold with a sale and leaseback arrangement, with a seven-year lease, plus a one-year option to Telstra.
The building offers 12,200sq m of gross floor area on the 1,675sq m site, and due to local planning is said to offer plenty of development potential.
Knight Frank’s Justin Bond, who has been appointed to broker the deal, says the property offers investors and developers an opportunity to secure a premium under-utilised site earmarked for major redevelopment.
“Particularly considering the highly attractive CBD position as well as the favourable town planning provisions,” Bond said.
“Effectively providing three-street frontages, the development potential of the site is significant.”
Bond said the city centre zoning allows for no maximum building height and offers a multitude of development potential including office, hotel, retail and residential.
While no price guide has been confirmed, thanks to steady demand in Brisbane’s commercial market, reports estimate the building could fetch prices north of $75 – $80 million.
Part of Brisbane’s history, the Elizabeth Street site has operated as a telephone exchange since the 1880s.
Up to 175 telephone services became available 24/7 in 1883 and it was manually operated until 1929 until switching over to an automated service.
Recent Brisbane CBD transactions include US property giant LaSalle’s $52.25 million purchase of 293 Queen Street in December.
Rockworth Capital Partners purchased the 17- storey office tower at 100 Edward Street for $60 million in August in an off-market deal.
Charter Hall acquired a high-profile development site on Queen Street Mall for $93.9 million last July.
Bond said he expects the 280 Elizabeth Street property to attract interest from both domestic and overseas buyers.
It will be sold via an expressions of interest campaign ending 28 February.
Brisbane Tower Hits the Block in Strong Office Market
A recently refurbished commercial office tower located in Brisbane’s golden triangle will hit the market this month.
Owners Fortius Funds Management and two BlackRock-managed private funds will test buyer demand for the 16-storey CBD tower, tipped to attract local and offshore interest.
The building, located at 201 Charlotte Street, was picked up for $81.5 million in 2015.
The A-grade office tower sits on a 1,839sq m site, providing 13,291sq m of net lettable area, and could garner interest for more than $130 million.
Justin Bond of Knight Frank and Flint Davidson of CBRE have been appointed to market the property, the duo say anchor tenant Anglo American have recommitted to the building until 2028.
“One of the attractions of 201 Charlotte Street is its anchor tenant, Anglo American, which is the third largest metallurgical coal mining company in the world, with a market capitalisation in excess of $40 billion,” Bond said.
Davidson said the property sits in proximity to all major CBD infrastructure projects in Brisbane, with $12.8 billion in developments located within a one-kilometre radius.
“This includes the Cross River Rail, which is 300 metres away, Queen’s Wharf, which is 500 metres away and Dexus’ Eagle Street Pier redevelopment, which is just 60 metres away.
In terms of the Brisbane metro office market, Bond said investor interest accelerated over 2018.
“And while demand has been particularly strong from overseas investors, we have seen a significant increase in cross-border capital, and yields have continued to tighten across the market,” he said.
Given strong fundamentals Bond expects Brisbane will continue to draw the attention of investors during 2019.
Also located within Brisbane’s ‘golden triangle’, the 10-storey Edison Exchange building, owned and home to Telstra, hit the market last month.
Other recent Brisbane CBD transactions include the $52.25 million sale of 293 Queen Street to US property giant LaSalle in December.
Rockworth Capital Partners purchased a 17- storey office tower at 100 Edward Street, within the golden triangle, for $60 millionin an off-market deal last August.
Five commercial property trends that will define 2019
As children return to school, we mark the start of a new year for the commercial property industry. After widespread falls in global equity markets during December, coupled with falling house prices closer to home, many view the year ahead with more trepidation than they did 12 months ago.
Furthermore, after five consecutive years of double-digit returns, the market is now perceived to be distinctly “late cycle”.
However, the underlying drivers of growth remain largely in place and Australia retains its attraction as a global investment destination. While growth is expected to slow, we expect the economy to remain resilient and supportive of the property market, with sustained employment growth underpinning demand and absorption.
Looking ahead for 2019 there are five trends that will define the market over the next 12 months.
Slower capital growth, with rental growth key to prospects: After a strong and sustained run, the pace of capital growth is likely to slow in 2019 as broad-based yield compression wanes. Rental growth and asset-specific factors will increasingly need to drive performance as the market enters a new phase.
Industrial portfolios at a premium: The weight of demand for investable industrial and logistics stock continues to outweigh supply, to the point where in 2019 we may see investors willing to pay a premium to access scale through portfolio acquisitions. This could spur the amalgamation and curation of balanced portfolios while investors explore a variety of creative approaches to access the market.
Dollar depreciation to buoy high-end retail: Moderating retail spending and the ongoing impact of new technology will drive continued polarisation in the retail space. The shopping centres and retail spaces that offer a premium experience will continue to outperform; while the depreciation of the Australian dollar is clearly supporting tourist arrivals and will benefit retailers exposed to visitor spend.
The growth of urban logistics: The nature of logistics demand is changing and urban logistics will experience significant growth throughout 2019 as e-retailers seek space in city fringe locations as a way to speed up delivery times and remain competitive. This will see demand shift inward, closer to the end user rather than outer city locations.
Resilient demand, but tighter liquidity: Demand for property will not be adversely affected by slower global growth and rising allocations to real estate from global private equity and domestic super funds will ensure they maintain their appetite.
However, lower capital growth may contribute to trade abating slightly resulting in lower investment volumes in 2019.
Ben Burston is partner, head of research and consulting, Australia at Knight Frank.
Brisbane Developer Snaps Up Newstead Tower for Commercial Scheme
Metro Property has offloaded the final undeveloped site of its five-tower Newstead Central development to fellow Brisbane developer Silverstone.
The fourth stage of Metro’s 800-apartment project was completed in mid-2018, with news that real estate agents were offering discounts of up to 20 per cent on its stock.
Moving away from an unsteady pocket of Brisbane’s residential market, Silverstone’s proposal has slashed 9-storeys from Metro’s final tower, submitting plans for a commercial scheme in its place.
The $80 million tower will offer about 8000sq m of net lettable area and small retail tenancy on the ground level.
The basement structure of the tower has already been built as part of Metro’s development, allowing Silverstone to proceed with a carpark already in place at the site.
“The opportunity we’ve come across is quite unique,” Silverstone managing director Troy Daffy said.
“The site is fully-serviced, so from a cost, risk and delivery [perspective] it’s a great outcome.”
Daffy said an underserviced CBD fringe office market for tenants seeking an A-grade offering prompted Silverstone to pursue a commercial scheme.
“We saw a large hole in the delivery of new A-grade buildings over the next 42 months.
“Along with tightening vacancy rates that are now well into the single digits and improving tenant demand, there is a lot of opportunity [for us] in this space.”
The “flight to quality” theme in Brisbane’s office market saw a significant uptick in activity in Brisbane’s fringes over the second half of 2018, with some high-profile sales in Brisbane’s inner-north.
Growthpoint snapped up Bank of Queensland’s headquarters on Skyring Terrace in Newstead for $250 million in November, while investment giant Centuria picked up 825 Ann Street and 100 Brookes Street in Fortitude Valley.
Consolidated Properties submitted a development application for a $250 million office building on Ann Street in late December.
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