Investa sells half-share in Ark, warns of two-speed market
INVESTA PROPERTY GROUP has raised $115 million through the sale of a 50 per cent stake in the Ark building in North Sydney to Prudential Financial's real estate investment unit, Pramerica Real Estate Investors.
INVESTA PROPERTY GROUP has raised $115 million through the sale of a 50 per cent stake in the Ark building in North Sydney to Prudential Financial's real estate investment unit, Pramerica Real Estate Investors.Michael Cook, the group executive for commercial property investments at Investa, confirmed the sale of the interest in the building.Investa, owned by US investment bank Morgan Stanley, has had the stake in the building for sale for some time as part of its strategy to develop assets then sell the exposure and use the cash for new projects. The remaining half will be held by Investa.The sale comes as Investa consolidates its recent takeover of the management of the former ING Office Fund, which it will use to further expand its foothold into the national office market.The head of research at Investa, Peter Carstairs, said recent office data from the Property Council of Australia indicated that high-quality assets remained in demand from tenants.The latest PCA Office Market report for the six months to July 31 showed Sydney's vacancy rate had risen to 9.3 per cent from 8.3 per cent."Despite the apparent lacklustre result for Sydney's office markets, tenant demand for prime space remains twice the historic 10-year average and more than 70,000 square metres of absorption has been recorded among premium and A-grade assets," Mr Carstairs said.But he warned the overall office sector was turning into a two-tiered leasing market."Tenant demand for premium and A-grade space has continued to drive the market for the first six months of 2011 with absorption of premium space averaging 35,000 square metres every six months, and A-grade space averaging 175,000 square metres over the last two years," he said."Secondary stock, however, reports negative absorption, creating a two-speed office market in many of our major cities including Sydney and Melbourne."Premium space is being absorbed at twice the historic average and A-grade space is being snapped up at a similar level - driving overall prime vacancy down to 6.2 per cent."