One of the Sydney’s most significant commercial sales of the last generation, this 1960s structure on the city’s popular Circular Quay was purchased in 2006. With five properties fronting the iconic Circular Quay, these locations are very difficult to acquire. However, with a dated building, we had to use our creative and commercial nous to develop this asset and make the most of its prime location.
With its premier harbour front location, a unique opportunity existed to transform the building into a luxurious residential setting. The focus was on attaining the appropriate development application (DA) to set the long-term vision for the site in order to realise its highest and best use.
However, the solution to maximise the capital value would take time – 6 years from when the original DA was lodged. The success story here lies in the clever relationships established with council and state governments, working together to develop the precinct and improve the access to neighbouring Pitt St. We focused on creating a two-tower solution – one low rise, one high – allowing more light into the area and greater pedestrian access to nearby Herald Square.
In the meantime we needed to retain and secure new tenants and drive income to protect the value through the different property cycles and to offer a future buyer the option of a secure ongoing income stream whilst not sacrificing the ultimate development opportunity. It could have required a full renovation – replacing the tired fit-out, sub-optimal floor-plate and existing tenants. However, we achieved this through a modest refurbishment and positioning the building as a prestigious address for new and existing businesses seeking flexible workspaces. Occupancy was increased from 68% to well over 90% at time of sale and rents of up to $1,300 per square metre per annum (comparable to premium new buildings) achieved in a 1960’s icon in a difficult leasing market.
We then took a proposition to market that enabled either intergenerational investors or property developers to purchase at this prestigious address. This meant that a buyer could attain a strong holding yield (with increased income potential) or a developer could acquire the building with an approved DA and lease terms which allow for redevelopment. The flexibility ultimately led to buyer participation from around the world making it one of the highest profile assets ever sold in Australia.
The development was sold in March 2015 as a going concern with an approved DA to bring this most impressive address to life and achieved a record price of over $2 million per unit site and a premium office value per square metre of net lettable space.
Sydney CBD, NSW