Sydney’s biggest individual strata transaction for 2019 has taken place just three days after the property was listed on market, in a sign that competition for the city’s shrinking supply of strata offices is heating up.
The 418-square-metre suite at 56/5-7 Macquarie Street, located in the Opera Quays building and with views of Circular Quay and the Harbour Bridge, was sold for $8.8 million, reflecting a price per square metre of $21,052 – a record for strata offices in the city – and a yield of 5 per cent.
Listing agent Tim Noonan, of Noonan Properties, who sold the property with colleague Ben Kennedy, said it was the biggest strata transaction in the Sydney CBD in 2019. The transaction also set a price-per-square-metre record for an asset above 400 square metres – excluding transactions by institutional investors, which are often shrouded in secrecy.
The property, which is currently leased until 2021 for $437,581 a year, sold in the first week of October after just three days on the market to a local private buyer who has long-term plans to occupy the premises.
Mr Noonan said there was strong interest from potential buyers from day one.
“The first day we listed we had over 200 inquiries, whether it be phone calls or emails, and the first guy to come through it lobbed an offer and said that he wanted to buy it and could buy it straight away. The vendor was happy to move on and sell it as the property was redundant to them,” he said.
Despite the property selling to an individual buyer, broader market trends were being driven by institutional players such as Dexus and Investa, following the introduction of new laws governing the purchase of strata property, Mr Noonan said.
“The uprise in commercial strata prices over the previous years is due to a number of factors, however, with new acquisition laws currently in action proving to be the key player in the increase. The new acquisition laws allow developers to take control of a site should they acquire a 75 per cent stake within the asset.”
He said this trend would likely lead to a tightening in strata office supply in the future if those buildings purchased by major players were withdrawn from the market.
“There’s six buildings that we’re kind of aware of that are in the process of being acquired for redevelopment purposes, so in those cases those buildings will be ultimately knocked down and redeveloped in amalgamation with some adjoining properties,” he said.
Commercial strata office supply in the Sydney CBD is made up of approximately 100 buildings, according to Mr Noonan – making up roughly 10 per cent of Sydney’s total office supply.
According to records from CoreLogic Australia, there has been 158 transactions of strata offices the CBD in the past 12 months for a total market value of $244.9 million, equating to an average transaction value of $1.55 million and an average sale price per square metre of $14,357.
Properties including 58 Pitt Street, 23 Hunter Street and 131 Clarence Street had all been subject to recent acquisition plays by institutional investors, Mr Noonan said.
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