RT Health Fund has sold Eveleigh House, a low-rise office in Sydney’s inner-city Surry Hills, for $33.53 million.
Based on the fully-let building’s annual rental return ($1.5 million), 1-9 Buckingham Street is exchanging on a passing yield of 4.47 per cent.
The sale price, according to marketing agency CBRE, “resets” values in Sydney’s city fringe upwards of 58 per cent.
The price values every square metre of building area at $19,770 per square metre.
The RT Health office sale comes five months after a five-storey building at 19 Foster Street, Surry Hills, traded for $39.5 million – or $12,500 per square metre of lettable space.
Capital Markets associate director Gemma Isgro said more than 440 enquiries were received for 1-9 Buckingham Street – a freestanding four-storey building with 12 car parks.
Ms Isgro added that 79 contract requests came in, as did 28 first round offers.
Not surprisingly, the sale price exceeded initial $20 million price hopes.
RT Health Fund has owned Eveleigh House more than 10 years.
It offered the investment with a leaseback for part of the office space. Co-workspace provider Aeona is the other major occupier.
The investment’s weighted average lease expiry (WALE) is 4.5 years.
With 1696 sqm of area, and a rooftop terrace, 1-9 Buckingham Street spreads a 638 sqm site overlooking Central Station and the light rail along Devonshire Street.
The purchaser, a Chinese investor, was represented by private real estate manager Centennial Property Group.
“With infrastructure projects providing better amenity to tenants, Surry Hills is now demanding CBD rental rates while providing a more creative alternative to the corporate CBD image,” Mr Wheatley said.
The broker added that “there is a huge force of capital looking for a higher return than banks can offer” and that “commercial property is now the instrument of choice”.
The Sydney CBD is a couple of kilometres north of Surry Hills.
Last July, Centennial paid $13.75 million moments before a scheduled auction for an office at 256 Crown Street, Darlinghurst, which is between Surry Hills and the city.
Elsewhere in Sydney, its portfolio also includes 365-377 Rocky Point Road, San Souci, 44 Hampden Road, Artamon, 50-54 Bayswater Road, Ruschutters Bay and 182 Blues Point Road, McMahons Point.
In the Adelaide CBD, Centennial controls The Village at 280 Grote Street and 97 King William Street.
In Melbourne, it owns major industrial sites at 414-416 Somerville Road, Brooklyn and 5-9 Kitchen Road, Dandenong.