January is traditionally one of the quietest months for the sale of commercial real estate, but that hasn’t stopped some assets changing hands during the break.
Commercial Real Estate spoke to the agents behind two of these transactions to find out if they were a sign of things to come in 2020.
The property: A 3520-square-metre office and warehouse on a 10,990-square-metre site at 61-63 Governor Macquarie Drive, Chipping Norton, in Sydney’s south west being sold by Australian Displays (SA) Pty Ltd.
Sold for: $9.8 million
The deal: Zoned IN2 light industrial, this property was listed for sale in October 2019. Negotiations for the sale ended up running into the Christmas holidays, according to listing agent Ryan Jennings, director of industrial at JLL. The property changed hands in early January, purchased by developers South Dowling Street Pty Ltd.
“We exchanged early this year. We were dealing with multiple parties resulting in the sale falling into 2020, but in the end it was a very good result – we almost got $900 a square metre,” Mr Jennings said.
The year ahead: Across Sydney the industrial sector is being tipped as one of the standout performers in 2020, along with offices in the CBD and city fringe.
The sale in Chipping Norton is a sign of things to come in the south-west Sydney industrial sector, according to Mr Jennings. He said there had been a shortage of properties on the market in 2019, with more expected to come to market this year.
“The sales market is looking like it’s going to pick it up. There was definitely a lack of supply for the past year or so,” Mr Jennings said.
“I think a lot of the businesses in South Sydney are getting pushed down the M5 [motorway] – there are a lot of owners in South Sydney who have sold and have seen the effects that rezoning for residential has had in that area and they are now looking further down the M5 with a buy-only mentality.”
He said suburbs such as Chipping Norton, an industrial hub with connections to major arterial roads, were likely to be in many buyers’ sights.
“The south-west growth corridor is recognised as one of the fastest growth corridors in the country, with the western Sydney infrastructure plan [WSIP] pouring an approximate $3.6 billion into significant infrastructure projects.”
Apartment blocks and boarding houses
The property: A three-storey residential apartment block and freestanding residence, Pomona, with a DA approval in place for a 31-room boarding house at 27-29 Macpherson Street, Waverley. The property was being sold for the first time since being built.
Sold for: $6 million
The deal: The property was sold to a local investor after receiving 420 inquiries from local, interstate and offshore buyers, according to listing agent Gemma Isgro, from CBRE’s eastern suburbs team, which also includes Paul Grasso and Nicholas Heaton.
Ms Isgro said 15 offers were received in the first round, with investors attracted to the added value brought by the existing DA approval. Under the DA for 31 self-contained units, the price per unit equates to $200,000.
The current properties, an apartment block and freestanding residence, sit on a combined site of 880 square metres.
The house, at 27 Macpherson Street, has three bedrooms, a study and a sunlit workshop. Next door at 29 Macpherson Street is a three-storey residential apartment block comprising six large, two-bedroom units with a shared laundry room and outdoor landscaped area.
The properties are generating an annual income of $109,460, although rents have been discounted to allow for pending termination of tenancy. The projected annual income for the site with the exisiting properties leased at market rate is $239,720.
The year ahead: With deposit rates at record lows and signs of life returning to the residential property market, including a forecast increase in rents, signs are positive for the boarding house sector in 2020, according to Ms Isgro.
The same CBRE team are listing another boarding house at 284 Clovelly Road, Coogee. The newly constructed property had 28 rooms accommodating 43 guests, with room rents averaging $550 to $600 a week.
Ms Isgro said the property would likely prove popular with “risk averse” investors seeking a foothold in the eastern suburbs. The property will be sold by way of international expressions of interest closing on February 26, 2020.
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