Malaysian entrepreneur and former newspaperman Clement Hii is selling his B-grade office building in Brisbane with expectations of more than $40 million, spurred on by strong sales evidence and successful turnarounds in that class of office space.
Mr Hii, who was a former chief editor of The Borneo Post and executive deputy chairman of Malaysia’s largest English paper, The Star, bought the the B-grade office tower at 116 Adelaide Street for $34.6 million in 2013 and has spent $3.5 million on refurbishing the property.
CBRE’s Tom O’Driscoll, Mike Walsh and Peter Court have been exclusively appointed to sell the 15-storey office tower.
“The family’s commitment and efforts to reposition 116 Adelaide has paid off,” Mr O’Driscoll said.
“With over $3 million of capex spent on the building, the asset has attracted numerous tenants resulting in more than 38 per cent of the building’s net lettable area being leased in the past 12 months.”
The building now has a 4.5-year weighted average lease expiry by income and is now 90 per cent leased. Most of the tenants are in the education sector.
B-grade assets, such as Mr Hii’s 6944-square-metre tower, which is located in the heart of the CBD, have been trading well in the past year, especially if their leasing profiles have improved.
“Quality B-grade assets can only be best defined by their leasing results,” Mr Walsh said. “The success to date of 116 Adelaide Street reflects this and that’s why we know this offering will be well received in the market, especially given the lack of such assets available for sale.”
B-grade buildings to sell in Brisbane recently include 110 Eagle at $6200 per square metre and 100 Edward Street at $9000 per square metre.
“Off the back of recent transactions, it’s now established that the B-grade market is trading between $6500-$9,000 per sq m and, to give some historical context, when we traded 300 Adelaide Street in 2014, it transacted at $3600 per sq m, which shows the growth over the course of the last four years, despite a relatively soft leasing market,” Mr Walsh said.