10 Spring Street to Test High Demand for Sydney CBD

28 June 2017

The impact of recent stock withdrawals for residential conversion and the Sydney Metro has led to unprecedented demand for B Grade office space in the Sydney CBD.

The subsequent spike in rents, coupled with limited opportunities to purchase investments (particularly those with supersite development potential), has driven yields down for B Grade assets as local private and institutional money and offshore capital try to secure assets to take advantage of the tenant demand and genuine effective rent growth.

In light of this strong demand and some aggressive approaches from investors and developers, Centuria will be selling 100 percent freehold interest in Swire House 10 Spring Street, a quality B grade asset with significant reversion and development potential with 53 percent of leases up for renewal in the next 24 months. Price expectation is $220m plus.

For sale through Simon Fenn, Graeme Russell and Ben Azar of Savills Australia and Josh Cullen and Rick Butler of INC Real Estate, the 13,871sq m building sits on a large site area of 1,505sq m and boasts large, effective floor plates over 17 levels including retail, with floor to ceiling glass windows, two street frontages with retail amenity, harbour glimpses from the upper floors and potential naming rights of the building.

According to Simon Fenn. NSW Managing Director of Savills, the refurbished building offers a short Weighted Average Lease Expiry (WALE) and existing vacancy on the upper floors, allowing for positive reversion to be captured.

“This is the right asset for both local and global capital who will be attracted by the 100 percent ownership, the immediate reversion potential and the opportunity to secure a large site with development potential in the core of the CBD,” he said.

The property’s development upside is on an ‘as is’ basis as the current building is under the allowable FSR, with further upside of a ‘Super Site’ if a larger site can be amalgamated.

A potential supersite could be created by amalgamating adjoining assets. Depending on which sites are acquired a 300m height limit is possible with 80,000sq m of NLA or a potential overall site area of 3,015sq m.

Josh Cullen said “An asset like 10 Spring Street has plenty to offer to all buyer groups, it has immediate income growth along with inherent development value as it stands, and the potential with adjoining sites to be an identified super site.”

Learn more about Savills Capital Transactions.

 
 

Key Contacts

Simon Fenn

Simon Fenn

Managing Director - NSW

Savills Sydney

+61 (0) 2 8215 8888

 

Graeme Russell

Graeme Russell

Director
Capital Transactions

Savills Sydney

+61 (0) 2 8215 8947