Investec is set to offload its office building on the fringe of the Brisbane CBD with price expectations of more than $90 million – after purchasing it in 2014 for $68.5 million – with plans to recycle the capital.
The 11-storey A-grade building at 757 Ann Street, in Brisbane’s Fortitude Valley, was bought new by the now dual-listed Investec Australia Property Fund, which trades on both the Australian and Johannesburg stock exchanges.
The property, which has 9422 square metres of office space and a weighted average lease expiry of five years, was one of many speculative projects in Brisbane built around the same time, which contributed to a surge in vacancy rates about eight years ago.
The vacancy rate in the precinct peaked in 2015 at 16.1 per cent but has since fallen to 12.1 per cent.
Cushman & Wakefield’s Mike Walsh and Peter Court, who have been appointed to sell the property, said Fortitude Valley was the tightest fringe office market and strong leasing dynamics made it an attractive proposition for buyers chasing diminishing yields in other asset classes.
“The only speculative development being undertaken in Fortitude Valley in the current cycle is Silverstone’s Stratton St project – 7750 square metres scheduled for completion in October 2020 – ensuring a tempered supply pipeline with new projects typically being majorly committed,” Mr Walsh said.
Mr Court added: “It has firmly established itself as an institutionally recognised investment destination of global scale when you consider the composition of the ownership profile which includes Centuria, EG, Dexus, AMP, Charter Hall, Lend Lease, AM Alpha, M&G and Heitman to name a few.”
Investec owns two other assets in Queensland, a 50 per cent stake of 324 Ann Street in the centre of Brisbane’s CBD, and an office building on the city’s outskirts in Eight Mile Plains, worth about $20 million.
The fund, which invests in commercial real estate across office, industrial and retail in major cities in Australia and New Zealand, expanded to Canberra earlier this year with the purchase of a low-rise building for $29.8 million, leased to the Commonwealth of Australia.
More recently it acquired three industrial assets in South Australia, Western Australia and the Northern Territory from the unlisted Charter Hall Prime Industrial Fund for $81 million.
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