CBRE Global Investors – on behalf of German real estate fund Spezialfonds – is acquiring a North Sydney office for a speculated $350 million on a fund-through basis.
Being developed by Zurich Insurance Group, which will also be a major occupier, 118 Mount street (pictured, above and right) is due for completion at the end of next year.
The 29 storey building with 22,694 square metres of gross floor area will be 64 per cent occupied by the vendor as the headquarters of its Zurich Financial Services Australia business.
The balance of the commercial space is presently being marketed for lease.
With a ground floor café and rooftop terrace, the North Sydney office is targeting a 5-Star NABERS Energy rating and 5-star Green Star rating.
It will occupy an “iconic” site with three street frontages adjacent to the motorway that runs over the Sydney Harbour Bridge, offering occupants uninterrupted water and city skyline views.
North Sydney is undergoing a revitalisation
The sale of 118 Mount Street comes a week after we reported that Stockland outlaid $121 million for two adjoining North Sydney offices at 118 and 122 Walker Street.
Stockland plans to amalgamate the land holding with another office it controls in the pocket (#110) to create a 60,000 sqm commercial complex.
“The North Sydney market is undergoing a revitalisation with a significant infrastructure spend,” CBRE Global Investors managing director, Australia and New Zealand, Chris Johnston, said.
“We are excited about how this market is evolving and the opportunity for our client to be part of that revitalisation as the owner of a development of this size, quality and location.”
The office will be near the new Victoria Cross Metro station and a new Metro rail link connecting North Sydney station to Barangaroo and Martin Place – due for completion in 2024.
In July we reported that Microsoft would relocate from several suburban Sydney locations, including its headquarters in North Ryde, to 1 Denison Street – a 39-level office (artist’s impression, bottom) under construction, and set to be North Sydney’s tallest.
Nine Entertainment (with a 17,000 sqm commitment) and software group SAP (6000 sqm) are moving to 1 Denison Street, too.
Zurich said this deal will ensure Australia remains part of its global investment strategy
“Zurich Insurance Group has a systematic and structured investment approach,” Zurich’s Head of Real Estate of Australia, Reto Buehler, said of the North Sydney office sale.
“Our mission is to achieve superior risk-adjusted returns relative to the Group’s liabilities,” the executive added. “With the sale and leaseback of 118 Mount Street, we have achieved important milestones as this property will provide our Australian business with new purpose-built headquarters and support the optimal diversification of our global real estate investment portfolio.”
“Notwithstanding the sale, Australia will remain part of our global investment strategy”.
“The sale of 118 Mount Street highlights the ongoing strength of institutional demand for assets in North Sydney, a precinct that continues to undergo a significant transformation,” Mr Hansen said.
“The North Sydney office market continues to be a destination of choice for global capital, having attracted more than $1 billion in investment in the past 12 months from Singapore, USA, United Kingdom, Hong Kong and Mainland China.
“North Sydney is expected to outperform in the short term with occupier demand supported by attractive rents compared to the Sydney CBD,” Butler said. “Over the longer term, we expect North Sydney rental growth to accelerate and spreads relative to the CBD to contract”.