50 Pitt Street Sydney is about to hit the market.

Signs of life in Sydney CBD as AEW plans to sell $250m tower

Ingrid Fuary-Wagner|Feb 25, 2020

After an unusually quiet start to the year for Sydney’s commercial real estate market, there are now the first signs of life with US real estate investment manager AEW Capital Management looking to offload a 15-storey tower in the tightly held heart of Sydney’s financial district.

AEW, which has $115 billion of assets under management across North America, Europe and Asia Pacific, is expected to bring the property to market imminently with expectations it could fetch $250 million.

It is likely to draw plenty of interest from potential buyers given the scarcity of stock in Sydney’s CBD with nothing new on the market for more than $100 million.

The asset manager bought the corner property at 50 Pitt Street about two years ago for $165 million as part of the group’s then $500 million local acquisition plan targeting commercial real estate.

JLL’s Rob Sewell, Luke Billiau and Simon Storey and Cushman & Wakefield’s Mark Hansen, Josh Cullen and Rick Butler have been appointed to sell the asset.

The tower sits at the intersection of Pitt Street, Bridge Street and Macquarie Place opposite the Australian Stock Exchange, and is part of a precinct set to undergo a major transformation with nearby properties earmarked for development.

On the opposite side of Bridge Street, the country’s biggest office landlord, Dexus, is planning a “city-defining project” at 56 Pitt Street, with plans for a premium office tower complex in the same vein as its landmark 1 Farrer Place complex, with construction costs estimated to be around $3 billion.

Nearby ASX-listed developer Mirvac has expanded its site at 55 Pitt Street for a proposed 155-metre high, 45,000 square metre office tower overlooking Circular Quay.

Mr Sewell said it was one of just five “pocket premium” towers in the Circular Quay precinct.

“It has the potential for an investor to add extra floor space, redesign the ground floor and lobby, and upgrade the facade and create a smaller premium tower,” he said. “There are plenty of tenants who want to be in a smaller building but have the amenity and quality of a large, premium-grade tower.”

AEW owns a number of assets in Sydney including a 14-storey office block at 54 Miller Street in North Sydney and 10 Barrack Street in the CBD.

The Boston-based group’s first acquisition in Australia was a B-grade tower at 55 Clarence Street in Sydney, which it bought for $169 million in 2016 and sold less than 18 months later, making an $80 million windfall.