Marprop Real Estate Investors has outlaid $69.4 million for a recently renovated Adelaide CBD office.
The former Statewide House at 99 Gawler Place is being acquired for an offshore party.
It is the manager’s maiden South Australian deal; the result reflects a circa six per cent net passing yield.
Colliers is speculated to be the marketing agency.
The vendor, Blackrock, paid the state’s Motor Accident Commission $34.6m in 2017, then refurbished.
99 Gawler Place
On c1500 square metres at the north west corner of McHenry Street, 99 Gawler Pl was developed in 1984.
It contains 11,158 sqm of lettable area – about 803 sqm which is for lease.
There is also a small ground level car park.
MAC offered 99 Gawler Pl as part of an 11 property portfolio which also included, in Adelaide, an office at 121 King William St which cost Blackrock $58.4m.
“We have spent considerable time watching and researching the Adelaide market, exploring the changing ownership and tenancy patterns,” Marprop executive director, Evan Gallagher, said.
“The market has definitely seen more institutional interest and ownership over the years,” he added.
The tenancy profile is changing too, away from its historic focus on government and defence, according to the executive.
“Whilst people see a headline vacancy in the double digits across the market, that number for well positioned quality assets is much lower,” Mr Gallagher said (story continues below).
“The asset we have acquired is perfectly suited for the growing amount of interest from SME tenants seeking floorplates of between 250-1000 sqm,” he added.
“At present, 70 per cent of tenant enquiries are for sub-1000 sqm”.
Interstaters eye Adelaide
The deal for 99 Gawler Pl comes four months since Brisbane based Sentinel Property Group made its maiden South Australian investment – the five level office component of the 19 storey The Conservatory on Hindmarsh Square complex.
On Grenfell St, that asset set it back $20.9m – a high 7.9pc yield, reflecting the lack of development upside.
In April, Cromwell, which is also headquartered in Queensland, outlaid $81.35m – a 5.12pc return – for an 11 storey, 11,121 sqm office on 1853 sqm at 91-97 Grenfell St.
Cbus, Centuria and Charter Hall all hold Adelaide CBD office development sites.
Last year, Renewal SA appointed Quintessential Equity, which like Cbus is Melbourne based, to construct a c$400m commercial building at the Lot Fourteen project, abutting the Royal Botanic Gardens.
According to the Property Council of Australia’s July Office Market Report, Adelaide CBD vacancy fell 30 basis points in six months, to 14.2pc.
Though this figure is considered high, it was one of the only major markets where more office space was filled than vacated.
Monthly surveys carried out by the PCA measuring office attendance rates puts the South Australian capital as the country’s best performer, at 71pc (compared to 34pc for Melbourne and 53pc in Sydney).
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