Propertylink has sold its 320 Pitt Street, Sydney, assets for $275 million, which has helped to bump office sales across the country over the $14 billion level as investors take advantage of the favourable leasing conditions.

According to CBRE's head of research Stephen McNab, in the 12 months to the end of the first quarter, across national office, industrial and retail markets, sales totalled $28.2 billion.

Under the deal, the Propertylink​ Office Partnership II (POP II) fund has entered into a contract with ARA Australia and Straits Real Estate for the sale of 320 Pitt Street, which was a 12.2 per cent premium to current book value. 

Propertylink bought the property in partnership with the Duke of Westminster's Grosvenor Group and Goldman Sachs in June 2015 for $200 million on a yield of 8.27 per cent. Once completed, the sale will generate a performance fee of about $17.9 million to Propertylink.

Propertylink's chief executive Stuart Dawes said there continues to be a weight of institutional capital seeking exposure to the Australian property market due to attractive yields and strong total returns, which will support the ongoing growth of the investment management business. 

The head of property, Peter McDonald, added the group has continued to assess the individual assets in the portfolio to capitalise on opportunities to realise value in the strong Sydney market.

"This has enabled us to achieve some significant premiums and redeploy capital into other investment opportunities across the business," he said.

Mr Dawes reconfirmed the full-year guidance for distributable earnings of 6.671¢ per security and a distribution of 6.321¢ per security.

This joins other recent sales in Sydney, including the Chinese-based John Holland's purchase of 275 George Street from QIC for $80 million and the Charter Hall Prime Office Fund, 20 Bridge Street, which was sold to a Hong Kong investor for $340 million and Investa Commercial Property Fund's acquisition in Brisbane for $53.75 million.

AMP Capital and EG Funds Management are firming as the frontrunners to buy a 25 per cent stake in the $1.9 billion Brookfield Property's Wynyard Place, while there are suggestions the tower at 10 Bridge Street may be offered for sale given the successful sale of 20 Bridge Street.

According to Kristina Mastrullo​, associate director research at Colliers International, the sales come as the Sydney CBD office market experiences a substantial injection of new development-related supply, adding up to 470,000 square metres by 2022.

In a new report, it says Sydney CBD's core precinct is set to benefit further from an overall repositioning as it takes on 51 per cent of total office development activity over the next five years.

"The core will remain the most sought after precinct once 60 Martin Place, Wynyard Place, Circular Quay Tower and AMP Capital's Quay Quarter Sydney are completed, driving future rental growth," Ms Mastrullo said.

"Over the last 12 months, the core precinct has outperformed all others, with an annual increase in net effective rents of 33.6 per cent."

Ms Mastrullo said the western corridor is due for 24 per cent of overall development activity as 10 Shelley Street is due to come online, along with Lendlease's Darling Square and Investa's Barrack Place. 

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