Savills News

Quality Stock Remains Rare Due To Sydney CBD’s Landlocked Nature

160 Sussex Street is a renovated 15 storey office building comprising 8,269.6sq m of net lettable area on an 853.6sq m site, overlooking Darling Harbour.

The Sydney CBD office market has been a standout across all key indicators with its vacancy rate remaining the lowest among the national capitals, which has driven exceptional performance in both capital values and rental growth, according to the latest research data from Savills.

While the most globally-recognised city in Australia, Sydney CBD’s investment performance differs from every other market in the country due to a single factor; its landlocked nature and lack of Greenfield development sites.

With vacancy currently at a low of 5.9 percent, coupled with expectations of further tightening over the next two years as net supply remains negative, rents have shown double digit effective growth over the past two years and risen to record levels. Given forward indicators and a distinct lack of short term supply, this trend appears to have further to run, while investor demand for quality assets remains strong in the Sydney CBD, particularly from Asian investors, despite concerns over tightening capital controls.

In light of this, 100 percent freehold interest in a B-Grade commercial office building in the CBD is set to hit the market next month, through Graeme Russell, Simon Fenn and Ben Azar of Savills Capital Transactions and Vince Kernahan, Tom O’Neill and James Barber of Colliers International, on behalf of local property investor, Stephen Burcher, of the Burcher Property Group.

160 Sussex Street is a renovated 15 storey office building comprising 8,269.6sq m of net lettable area on an 853.6sq m site, overlooking Darling Harbour and offers a Weighted Average Lease Expiry (WALE) of 3.26 years (by income) with an approximate net income of $4.6 million.

The property is fully leased with major tenant Education Centre of Australia (ECA) occupying 46 percent of the building. Other major tenants include Rankin Ellison Lawyers, Fortinet International, Dual Australia, Trippas White Group, Turner Freeman Lawyers and Health Care Australia.

160 Sussex Street is strategically situated between King and Market Streets in the Sydney CBD’s Western Corridor, the precinct which is witnessing the highest net effective rental growth, according to Graeme Russell, Director of Capital Transactions at Savills Australia.

“What is happening within the Western Corridor precinct is changing the dynamics of the Sydney CBD. New construction worth billions in office, residential, hotel, transport, infrastructure and entertainment developments in the area gives Sydney a new focal point.

“The commitment by both public and private sectors promises that this precinct will bring a new standard of working and living to the area with 160 Sussex Street perfectly positioned to benefit from this development activity,” he said.

Vince Kernahan, National Director of Investment Services at Colliers International said “160 Sussex Street was constructed in 1992 and is a building enhanced by its elegant and timeless heritage façade while incorporating modern office accommodation.

“More than $6.5 million has been spent on services and refurbishment works throughout the building since 2012. Minimal capital expenditure will be required in the short to medium term,” he continued.

160 Sussex Street is for sale through Savills Australia and Colliers International via an Expressions of Interest campaign, closing 4pm, 2 November 2017.

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