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The spotlight is on the city fringe given the significant stock withdrawal from office to luxury residential, growing demand from creative tenants wanting to be located in the urban heart of Sydney and the re-gentrification of the areas as a result of the residential boom and light rail making the city fringe even more connected to the Sydney CBD.
The market is tightly held given its proximity to the CBD, urban creative appeal to tenants and demand from high end luxury residential developers. The recent conversion of Griffith Teas is a case in point where new residential gross realisation bench marks have been realised that are usually reserved for Sydney Harbour water front property.
In addition to this, tenants in the city fringe markets are expected to be faced with an ongoing squeeze on available office space as demand remains strong and new supply muted, all set against a backdrop of growing interest from business’s wanting to be located in these areas.
These strong fundamentals are expected to drive rents significantly higher over coming years putting property owners in a strong position.
Savills agents Simon Fenn, Graeme Russell and Tim Grossman along with CBRE agents Nicholas Heaton and Sharon Yang have been appointed on behalf of Property Bank Australia to sell a fully refurbished and occupied city fringe freehold office building in Chippendale. The property is 100 per cent leased by Navitas Limited, an ASX 100 listed company on a 15 year lease with a 10 year option, an annual net rental of circa $1.823 million and is currently zoned B4 Mixed Use.
According to Simon Fenn, Managing Director of Savills NSW strong interest is expected from local, interstate and off shore buyers given the compelling fundamentals of the city fringe market and the unique nature of the asset.
“There appears to be no significant supply in the pipeline for the City Fringe, with just 5,500sqm currently under construction in Chippendale (expected in H2 2018). Future supply in the City Fringe remains severely constrained due to limited available sites and significant stock withdrawals for residential use.”
According to Nicholas Heaton, NSW Head of Private Clients & Metropolitan Investment Properties of CBRE, “We are not aware of a comparable offering in the past decade in Sydney’s city fringe. This fully refurbished building provides secure income via a long term lease to a quality covenant. In addition, due to the low passing rents, there is significant rental reversion potential to be capitalised upon to take advantage of the booming city fringe leasing market. The property’s mixed use zoning also allows a Purchaser the option for residential conversion beyond the existing lease tenure”.
With the building flanked on all sides by action from Sydney University, Broadway Shopping Centre, UTS and Central Station combined with significant planning changes in the wings, the precinct is set for exciting growth and change. UrbanGrowth NSW has developed an Urban Transformation Strategy for around 50 hectares of government-owned land in and around the rail corridor from Central to Erskineville Stations. The property sits within the “Central Station Precinct”, which aims to become a world class commercial and retail transit hub that provides for the expansion of Sydney CBD and increasing density.
39-47 Regent Street, Chippendale is to be offered for sale through Savills and CBRE by way of Expressions of Interest closing Thursday 25 May 2017 at 5pm (AEST).