St Leonards office block is tipped to fetch more than $50 million
One of the north shore’s most well known office blocks is being sold by its Perth-based owners Property Bank Australia and Security Capital Australia, following the sale of similar buildings by them in nearby North Sydney.
The 10-storey B-grade tower at 154 Pacific Highway, St Leonards, with its distinctive blue-tinted glass, has the potential to be redeveloped and could sell for more than $50 million, according to industry sources.
The fully tenanted building has 6300 square metres of space, on the corner 3080-square-metre block.
If the asset sells for its expected price, it would have doubled in value in six years. The vendors bought the property from Charter Hall for $25.5 million in 2012.
The vendors have been active on the lower north shore, jointly selling 75 Miller Street, North Sydney, to Chinese investors for nearly $52 million in late 2017 – more than doubling the return on their $22.5 million investment in 2011.
The partners also offloaded 8 West Street, North Sydney, for $60 million in July 2017 – more than triple the $19 million they paid for it in 2010.
Another similar deal, which they did with RG Property, was the $135 million sale of 116 Miller Street and 173 Pacific Highway, North Sydney, to another Chinese investor in mid 2017. They had paid $59.55 million for it in 2012.
The Pacific Highway property is within the corridor earmarked for future mixed-use rezoning. Photo: Commercial Real Estate
Office blocks on the lower north shore have seen strong rental growth thanks to withdrawals of B-grade stock for residential conversions.
Vacancy rates in the Crows Nest and St Leonards area fell to 11.1 per cent from 12.6 per cent in the six months to January 2018, Property Council of Australia data shows.
Currently zoned for commercial core use, the Pacific Highway corridor at St Leonards has been earmarked by the state government for increased building heights and density with a focus on mixed-use development.
These rezoning changes are scheduled for public exhibition in coming months.
Buyers are likely to be interested in plans to redevelop the building that were drawn up by PBD Architects in light of the proposed new zoning framework.
The potential development could include about 159 apartments across 15 storeys, 1500 square metres of retail space on the double-heighted ground floor and a rooftop terrace.
The building was recently refurbished and has an average office rent of $426 a square metre, with more than 30 per cent of tenants due for a lease renewal in the next two years.
It has harbour views, 182 car parking spaces across two levels and a café on the ground floor.
Knight Frank’s Tyler Talbot and Dominic Ong, along with CI Australia’s Bevan Kenny, Chris Veitch and Rikki Wu hold the listing.
Expressions of interest close April 19.
