Doma Group sells Newcastle A-Grade offices for $52.2m
Doma Group has sold its first office project in Newcastle’s Honeysuckle precinct to IOOF Investment Management for $52.2 million.
The A-Grade seven-level commercial building at the harbourfront precinct was completed in 2017 and is fully leased to seven government tenants. IOOF will add the property to its Property Plus Australian direct property portfolio.
The 6524-square-metre building has a weighted average lease expiry of 6.8 years and sold on a net passing yield of about 6.2 per cent.
It is the highest-priced office sale in Newcastle, according to selling agent Colliers International. Peter Macadam, Paul Powderly, Matthew Winter and Michael Montelibano brokered the deal.
“A prime location, the modern construction and high specification, a mix of quality government and private tenants and the strength of the local economy drew us to this opportunity,” IOOF Investment Management senior portfolio manager Simon Gross said.
“We are very pleased to add 18 Honeysuckle Drive to our portfolio given the strong fundamentals of the Newcastle market.”
A-grade space is generally in short supply in Newcastle. According to Colliers International, the A-Grade vacancy in Newcastle is 2.8 per cent and is forecast to fall further, driving up prices of A-grade deals.
The Canberra-based Doma Group, which has a strong presence in Newcastle, has another six projects in Newcastle including Newcastle’s largest standalone office building at 15,000-square-metre and with an end value of around $100 million, as part of its redevelopment of the former Store site on Stewart Avenue. Construction at the 15,000-square-metre building commenced last month.
The 1.2-hectare Store site itself will also accommodate retail space and two more residential towers and a carpark.
Doma also has apartment projects Lume, The Crossing and Huntington Newcastle also on Honeysuckle Drive.
The increased development activity is part of Newcastle’s urban transformation and transport program which have attracted other big city developers including Iris Group, which is developing a new mixed-use precinct “East End” at the former home of the BHP Steelworks.
