Leighton Properties' $400 million office tower development at 177 Pacific Highway, North Sydney, is set to reignite interest in the area from investors who are looking for significant projects.
The high-rise development will feature 40,000 square metres of A-grade commercial space across 30 levels.
Completion is scheduled for the first half of 2016.
Leighton Properties has appointed Jones Lang LaSalle and CBRE as exclusive agents for the sale of the asset, with suggestions a number of Australian and overseas investors are showing strong interest.
Jones Lang LaSalle head of sales and investments (NSW) Paul Noonan said the company's research indicated there was a basket of only 48 assets nationally with investment characteristics similar to those of 177 Pacific Highway.
"We expect this will result in strong competition from domestic and international investors," Mr Noonan said.
CBRE national director of capital markets Josh Cullen said there was strong capital chasing limited core central business district opportunities within the Australian market.
According to Jones Lang LaSalle sales and investments manager Ben Larsson, the recent transaction volumes show only part of the story.
"Sydney's investor appetite is largely due to record-low interest rates and high commercial property yields," Mr Larsson said.
"Investor mandates from sovereign wealth funds, multibillion-dollar pension funds and global property investment managers seek CBD-based core and near-new investment stock - however, there is very little available stock."
Mr Larsson said he expected North Sydney, being the most prominent near-CBD market, to come under increased focus from investors unable to purchase in the Sydney CBD.
"A re-energised buyer, the offshore investor, competing with more established suburban investors has led to a degree of frustration at the current relative lack of supply on Sydney's North Shore," he said.
Savills divisional director Simon Hemphill said his group had recorded about $938 million worth of office transactions in the 12 months to June, across the combined north shore market.
"This is up 67 per cent from $561 million in the previous year, and up on the five-year average of $413 million," Mr Hemphill said.
"During the same period, 20 properties were sold, up from 14 from the previous year, and up on the five-year average of 12."
Mr Hemphill said capital values in North Sydney as at June this year typically ranged between $7097 and $8828 a square metre for A-grade buildings, and between $3789 and $5455 a square metre for secondary-grade buildings.
He said market yields in North Sydney as at June were between 7.25 per cent and 7.75 per cent for A-grade buildings, and between 8.25 per cent and 9.5 per cent for secondary-grade sites.
The main buyers, Mr Hemphill said, were superannuation funds, real estate investment trusts and wealthy individuals.
The REITs and funds accounted for 54 per cent of the stock sold, or $500 million worth of sales for the year to June 30.