An unprecedented $500 million in commercial property is up for grabs in the Sydney Harbour mixed-use suburb of Pyrmont, with a second major office building in the city-fringe suburb hitting the market.
After quietly sounding out interest over the past few weeks, AEW Capital Management has decided to sell 19 Harris Street, headquarters of Thomson Reuters, through JLL with a price guide of $200 million.
It bought the building, which is 96 per cent leased and has a weighted average lease expiry (WALE) of three years, in late 2018 for $143 million.
This follows the listing several weeks ago by Dexus of 100-130 Harris St as part of its asset divestment program, which includes five properties in Sydney and another in Brisbane.
Domain and WeWork are the major tenants in the revamped woolstore which Dexus paid $327.5 million for in mid-2017. The property has a book value of $310 million and a WALE of 4.2 years.
The biggest commercial sale in the suburb was the fund-through purchase for $297 million of the campus-style development at 21 Harris Street by Suntec REIT from developer Milligan Group.
JLL said commercial vacancy rates in the area were lower than the city average at 4 per and that the peninsula was set to get a huge lift from infrastructure development and a new local Sydney Metro station.
Other major nearby projects include the new Sydney Fish Markets and Blackwattle Bay redevelopment, the demolition and rebuild of Harbourside at Darling Harbour, ongoing work at The Star and the upgrade of the Powerhouse Museum.
Stuart Rodriguez from Fringe Commercial said lockdowns had heavily affected leasing demand in the area, but the development of 100-130 Harris Street and more recently 21 Harris Street changed the area, now a leading creative hub.
“Pyrmont used to be known as the poor cousin to Surry Hills but these buildings brought in cooler, younger, funkier kinds of businesses,” said Mr Rodriguez.
“It is a tough time, but if you get the product right you get the demand. People want to be in Pyrmont, but they’re just not going to put up with an average-looking space.
“So whenever something good quality, nice looking with good facilities comes on the market it just goes – tenants really want to be in the area.”
Agent Caroline Selka from Belle Property said there had been enormous change in Pyrmont from a commercial perspective.
She said the area around 100 Harris Street “was literally like a ghost town for years”.
“I know what it was like to stand there and sell while people were looking at holes in the ground,” she said.
“Or you’d look at a building that was literally covered in vines and people would be like, ‘what’s the deal?'”
But now, she said, “it’s buzzing” and had “got an energy about it”.
“Pyrmont is a very diverse market, which is what makes it so interesting.”