The 14-level office building at 2 Elizabeth Plaza, North Sydney is for sale. Photo: Supplied

North Sydney office market in the spotlight with $120m sale

Carolyn Cummins|Aug 14, 2019

Demand for the resurgent North Sydney office market will be tested with the sale by Blackrock’s private fund of 2 Elizabeth Plaza which has price expectations upwards of $120 million.

Known as 2EP, the 14-level office is part of North Sydney’s inner circle. Nearby are four key developments: the Sydney Metro, Nine Entertainment’s new home at 1 Denison Street, 88 Walker Street and Dexus’ recently completed 100 Mount Street.

Demolition is also now complete of 86-88 Walker Street, the site of a new 48 storey office and hotel development that will be North Sydney’s tallest tower.

The listing of 2 Elizabeth Plaza comes amid a resurgence of interest in the North Sydney office market. The most recent Property Council of Australia office market report reveals the area’s vacancy rate is now 7.9 per cent, with a majority of new supply pre-committed.

Nine Entertainment has increased its office space, securing a 25,000 square metre lease for 12 years in Winten Property Group’s $1.2 billion 1 Denison commercial office building. It will join Microsoft and SAP in the property, which is being managed by CBRE.

Citrix’s Sydney team have also relocated to a new headquarters in Sydney’s new technology hub at 100 Mount Street, North Sydney.

“With the completion of the North West Metro, there is a strong outlook for the North Shore, the increased demand has stimulated growth and created further opportunities for the industry, with a steady supply of office space in the pipeline for 2020 and 2021,” Property Council NSW executive director Jane Fitzgerald said.

The agents to the sale, Bevan Kenny and Chris Veitch of CI Australia, and Josh Cullen and Mark Hansen of Cushman & Wakefield, said the office was expected to generate significant interest because few smaller assets were available.

Mr Kenny said North Sydney’s transformation was now tangible.

“The development cycle is pushing up market rents across the board and we expect this trajectory to continue as each development milestone is reached, culminating in the opening of the Sydney Metro in 2024,” Mr Kenney said.

Cushman & Wakefield’s Josh Cullen added investor demand for office assets across Sydney metro locations was exceptionally strong and North Sydney remains at the forefront.

“This is highlighted by recent asset sales in North Sydney involving domestic and global investors seeking to capitalise on strong leasing conditions, an increasing level of pre-commitments for major development projects and ongoing local infrastructure spend,” Mr Cullen said.