Office demand high
Deep End Services principal Kevin Stanley, said despite an uncertain outlook for white-collar employment growth, trading in the office sector was well above its traditional 50 per cent share.
"Purchases of new office buildings from developers, particularly in Perth, Brisbane and Sydney, were especially influential in this annual trading result," Mr Stanley said.
He said in the past year the Australian real estate investment trusts have been net sellers with the superannuation and private companies the dominant buyers.
One company that was taking advantage of the market was the Perth-based PBA (Property Bank Australia), which paid about $30 million for two properties on Sydney's north shore.
The property investment group has acquired 53 Berry Street in North Sydney from Charter Hall for $19.75 million and 110-112 Christie Street in St Leonards for $8,675,000 from a private estate.
PBA, in conjunction with its investors and joint venture partners, has now bought more than $180 million in office assets on Sydney's lower north shore over the last three years.
PBA director Gus Mackellar said some of acquisitions included a St Leonards property from Charter Hall for $25.5 million along with two other North Sydney properties totalling $75 million in 2012.
"We continue to have strong support from existing and new investors, particularly from Sydney, who understand our strategy and the potential our investments offer," Mr Mackellar said.
"Investors generally prefer to align themselves with groups with a proven track record and a remuneration structure where everyone's interests are aligned."
PBA has been an aggressive counter-cyclical buyer in the Sydney and Melbourne office markets since the onset of the GFC. Before this, PBA, along with joint-venture partner Security Capital Corporation, sold down its portfolio from 2006 to 2008, including a $200-million portfolio sale to GE Real Estate.
"We like the fundamentals of the Sydney office market and the fact that we can buy below replacement cost," Mr MacKellar said.
He added that Sydney's suburban market, particularly the north shore, was the target sector.
At the 53 Berry Street site, PBA plans to undertake an immediate upgrade of the property to improve the building's leasing profile.
"The property has enjoyed a strong leasing history and is well placed to capture rental growth as supply in the lower north shore market tightens," Mr MacKellar said.
The deal was brokered through Tyler Talbot and Bevan Kenny of Chesterton International.
Frequently Asked Questions about this Article…
Total commercial property sales in 2012-13 reached $14.4 billion, about 40% above the long-term average annual turnover. For everyday investors, this signals a busy transaction market and increased liquidity in commercial real estate during that period, which can create opportunities to buy assets or realise gains depending on your strategy.
Yes. Deep End Services principal Kevin Stanley noted that trading in the office sector was well above its traditional 50% share even though the outlook for white-collar employment growth was uncertain. That suggests investor appetite for office assets remained strong at the time.
The article says Australian real estate investment trusts (REITs) were net sellers, while superannuation funds and private companies were the dominant buyers. That shift is important for investors tracking who is accumulating office stock and who is exiting positions.
PBA paid about $30 million for two north-shore properties: 53 Berry Street in North Sydney from Charter Hall for $19.75 million, and 110–112 Christie Street in St Leonards from a private estate for $8,675,000. The group has bought more than $180 million in lower north shore office assets over the past three years.
PBA has been an aggressive counter-cyclical buyer since the onset of the GFC, targeting suburban Sydney office markets—particularly the north shore—and seeking to buy below replacement cost. For investors, this means PBA is focused on acquiring assets that could benefit from rental growth and capital appreciation as market conditions tighten.
Yes. At 53 Berry Street PBA plans to undertake an immediate upgrade to improve the building’s leasing profile. The property has a strong leasing history and PBA expects it to capture rental growth as supply tightens in the lower north shore market.
Before its recent buying spree, PBA and its joint-venture partner Security Capital Corporation sold down part of their portfolio between 2006 and 2008, including a $200 million portfolio sale to GE Real Estate. This highlights that PBA has shifted from selling to active counter-cyclical buying since the GFC.
The deal for the north-shore properties was brokered through Tyler Talbot and Bevan Kenny of Chesterton International. One of the properties (53 Berry Street) was purchased from Charter Hall, and another (110–112 Christie Street) was acquired from a private estate.
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