Private Chinese-backed investor China Venture has sold its office strata block at 270-272 Pacific Highway for close to $60 million, after plans on getting high-rise office development uplift fell through.
The group spent a couple of years amalgamating the roughly 45 office strata units in the block from individual owners, paying a total price of roughly the same as the sale price, hoping to get a sizeable uplift on the back of its access to the new Crows Nest metro station across the road.
It completed the amalgamation in 2017.
If a high-rise office development had been approved, the property on a combined 4350-square-metre site could have been sold for as much as $150 million, as foreshadowed by The Australian Financial Review last year.
But the highest uplift suggested through the current draft St Leonards and Crows Nest 2036 precinct and rezoning plans being undertaken by the NSW government would likely be about eight floors, only three more floors than the current building.
For China Venture, eight floors or a medium-level development would not be a viable deal as a taller tower would be more appealing with office space in short supply in the area driven by both a falling vacancy in the nearby North Sydney CBD and an increasing demand by businesses wanting to be close to the metro station.
While a lost opportunity to China Venture, it was a good passive office investment for the new owner which now has a fully leased and amalgamated block of two five-storey office buildings with ground-floor retail.
The property with a gross annual income of nearly $2 million still has an attractive mixed-use zoning.
The ongoing rezoning around new Sydney metro stations has resulted in many investors and owners looking to capitalise on rising values but not everyone wins.
A premature purchase while plans such as the St Leonards and Crows Nest 2036 are still being finalised can result in new buyers securing expensive assets without confirmed development uplift.
Aside from 270-272 Pacific Highway, other places like St Leonards South are also in “limbo” as they await final rezoning plans.
Knight Frank and CBRE were involved in the sale of 270-272 Pacific Highway. All parties declined to comment.