262 Castlereagh Street, Sydney

Office sale to test Midtown demand

Carolyn Cummins|Jun 04, 2020

Office sales are emerging as the economy comes out of hibernation, with a site at 262 Castlereagh Street set to the test investor demand.

Located in Sydney’s midtown precinct, the four-storey office building with ground-level retail covers a 291 square metre site area on Castlereagh Street between Bathurst and Liverpool Street, and is being sold by a private investor. No price was disclosed but similar properties have garnered a price tag of about $20 million.

It comes as the Sydney office market remains in demand from investors, albeit at a slower rate due to the impact of the global pandemic.

David Green-Morgan, Real Capital Analytics’ managing director for Asia-Pacific, said so far there have only been few indications of deals being terminated, “suggesting that investors are adopting a wait-and-see approach rather than entering panic mode”.

“The wave of the pandemic is further along in Asia-Pacific than other regions and most signs suggest that APAC may already be at, or near, the bottom of the investment slump.”

He said investors are watching the few economies within the region that appear to have the virus under control, which may give them the clearest view of the road ahead.

Selling agents for 262 Castlereagh Street, Eugene White, Vince Kernahan and Tom O’Neill of Colliers International said, in terms of new infrastructure and major development, “Sydney CBD remains the first choice for investors, developers and occupiers”.

Mr White and Mr O”Neill said the property’s attraction is its zoning permits that will appeal to a wide range of uses including commercial, strata, hotel, student accommodation and retail. It is also one of the midtown area’s last remaining boutique redevelopment opportunities.

“The midtown precinct is benefiting from an abundance of new infrastructure and major developments delivering valuable amenity and new life to the precinct,” Mr Kernahan said.

“The Pitt Street North over-station development will include a 39-level office and retail tower of 47,000 sq m whilst the south over-station development will deliver Sydney’s first build-to-rent tower comprising 230 apartments.”

SG Hiscock portfolio manager Grant Berry said overall, office net absorption has continued to soften but the real estate investment trusts (REITs) have maintained good occupancy.