Newcastle's first A-grade strata office tower 'cheaper to buy than rent' for businesses

“We’ve been having a lot of A-grade commercial development in Newcastle, but nothing that’s strata before,” said director Ian Summers.

Altim Property is about to start construction on its five-level, 30-suite building Swift on Hunter in the city’s West End.

“A lot of it has been for tenants who’re looking for 1000 square metres to 15,000 square metres, and usually with one landlord owning the whole building.

“But this will be different as the suites start at 50 square metres, so it will cater for small business owners, or up to 192 square metres, the kind of people who had to go before to B or C grade. And people can, of course, put suites together to make them larger.”

Already, 30 per cent of the building has been sold off the plan after a soft opening at Christmas. Sales include two amalgamated suites to one company on the top floor for a total of 250 square metres for $2.325 million.

Construction is due to begin in the first week in March, with prices starting at $500,000 for a suite with a car park.

As for investors, the suites might well prove attractive at that starting price, especially since the latest Domain House Price Report revealed that the median price of a house in Newcastle is now $820,000, up a hefty 22.4 per cent on the same time last year.

“For business owners, it’s going to be cheaper to buy these suites than rent-A grade space,” said Mr Summers. “The occupancy cost of being an owner, we’ve calculated to be approximately half that of paying corporate rent as a tenant on an annual basis.

“As an owner, interest rates are low, you have fewer outgoings, and you can claim depreciation.”

Many of the buyers so far have bought from their superannuation funds or with a commercial loan, advises sales agent Adam Leacy, partner in Commercial Collective. Investors will be expecting a return of between 5 and 5.5 per cent.

“The suites are a very affordable price and we’re being approached by mum and dad investors who maybe already have three or four residential investments and are now looking to step into the commercial world,” he said. “The developers have thought of everything in terms of design and infrastructure.

“We’re now also talking to a small gym and physio, so it will be an excellent place to work. It’s as good as a large building in Sydney or Melbourne, but on a smaller scale.”

Developer Mr Summers, before starting his Altim Property, had worked for 10 years in the real estate industry elsewhere in Newcastle, in both the commercial and residential sectors, primarily in the CBD and CBD fringe. He’s been involved in more than half-a-billion dollars’ worth of development, including the 8000-square-metre A-grade office Darby Plaza, and the 180-apartment Sky Residences.