Keppel Capital circles $300m Macquarie Park office asset
Singapore’s Keppel Capital is homing in on a $300 million office building in Sydney’s Macquarie Park owned by Goodman Group, in a positive sign offshore investors still have their sights set on Australia’s office market despite COVID-19.
The fund manager is understood to be undertaking due diligence on the 41,595 sq m A-grade office asset at 4 Drake Avenue, known as Pinnacle Office Park.
The estate, with its two A-grade towers, is home to major corporations including gambling machine manufacturer Aristocrat and Japanese multinational technology company Konica Minolta. The property includes a child care centre, gym, end-of-trip facilities and cafe.
Keppel Capital and Goodman Group declined to comment.
Despite the COVID-19 pandemic reaching Australian shores earlier this year and creating uncertainty over longer-term workplace occupancy, activity is picking up in the office market with much of it driven by overseas investors.
Sales, however, are taking much longer to transact given travel to Australia is difficult, making it hard for some overseas groups to undertake physical inspections of a property.
On Flinders Street in the Melbourne CBD, German investor Deka Immobilien is understood to be the frontrunner to buy an office tower being offloaded by a Dexus-managed wholesale fund for more than $450 million, a price that is above the asset’s last book value. Sources say Keppel Capital had also been one of the groups to throw its hat in the ring to acquire the Flinders Street tower.
It also follows the recent sale of another office tower owned by Dexus, at 45 Clarence Street in the Sydney CBD, which was bought by Peakstone, a Singapore-based manager of Asian capital, for $530 million, following an unsolicited offer.
In Macquarie Park, US real estate investment manager AEW Capital Management is closing in on another office building owned by Goodman Group, which is set sell for about $140 million.
It is understood AEW is undertaking due diligence on the property, known as Macquarie Corporate Centre, with a deal expected to transact on a yield of just above 5 per cent.
Owners of spacious suburban offices outside of the major CBDs with ample parking spaces could emerge the winners from the pandemic as workers avoid travelling on public transport to work in crowded office towers.
The amount of sub-leasing space has surged in both the Melbourne and Sydney CBDs as major corporates bring forward decisions to reduce their footprints in response to the uncertain business conditions.
Goldman Sachs expects vacancy in the Sydney CBD to peak about 13 per cent by the end of 2022 and a year earlier in Melbourne.
