On the Barangaroo bandwagon
The northern end of the city's western corridor has experienced a marked increase in transactions since Lend Lease's $6 billion Barangaroo became a reality in late 2009.
CBRE has tracked sales of more than $5 million and found that they have increased since the mid-2000s. So far in 2013, there have been three deals worth $100 million. This compares with sales of $112 million in 2009, before Barangaroo was announced. Other bumper years were 2010, 2011 and 2012, with $255 million across six deals, $393 million across nine deals and $160 million across five deals, respectively. For the five years before that, the average yearly activity was $113 million.
This increase is due to the benefits building owners will reap when Barangaroo South is complete. Up to 285,000 square metres of the development will be commercial space, which will shift the geographical centre of the city office market towards the northern end of the western corridor. Barangaroo will bring an influx of new retail and hospitality amenities for office workers to enjoy. Transport links are also being rejuvenated, with additional ferry stops, footpath widening and the under-construction Wynyard Walk.
Investors are realising the benefits of being part of the growing precinct and are keen to secure property before the prices increase. A recent sale was a 12,570-square-metre Sydney tower, at 117 Clarence Street, to Altis Property Partners for $61.25 million. It is strategically located in the area set to benefit from the growth forecast with the Barangaroo development.
Another consequence of the emergence of the northern end of the western corridor as a more centralised location is the conversion of C- and D-grade office space into residential or serviced apartments. Several properties have been bought with a view to converting them to residential accommodation.
Occupiers are drawn to the area because there is perceived good value in the northern end of the western corridor compared with other precincts within the city centre and even North Sydney. The thirst for good-quality space in the precinct has led to a fall in vacancy rates in the past decade, despite a strong growth in stock.