A landmark office building in Wollongong has set a new benchmark after it sold for a record price of more than $50 million on Friday to private real estate investors Avari Capital Partners.
The office building, which is located in the centre of Wollongong on a corner block at 90 Crown Street, has 9172 square metres of net lettable area across seven levels and is currently leased by various government departments.
Sold on a yield of 7.75 per cent and a weighted average lease expiry of 3.5 years, the building is the first foray into the Wollongong market for Avari Capital Partners, of whom Jing Liao and Jie Li are the directors.
The sale was negotiated by Knight Frank’s Ben Mostyn, Tyler Talbot and Dominic Ong in conjunction with Travis Machan of MMJ on behalf of Castlerock, a privately owned company that specialises in developing and managing office buildings for the government sector.
“The sale demonstrates the attractiveness of the region for investors seeking premium commercial properties. We are continuing to see increasing interest from investors in Wollongong, particularly from offshore investors seeking higher yielding investments,” Mr Mostyn, Knight Frank’s head of Illawarra, said.
The previous office sale record was set when Sydney-based fund manager Folkestone sold nearby 43 Burelli Street to a wealthy offshore investor for $46.1 million in 2017.
MMJ’s Travis Machan said the building’s tenancy mix had been a drawcard. “Because it has retail as well as commercial, that assisted in a tighter yield rather than just a straightforward commercial building with office tenants,” Mr Machan said.
Wollongong was now on the radar of a lot of Sydney fringe-based tenants who had been priced out of Sydney’s CBD, but there was a lack of large office space available, according to James Mulcair, commercial leasing partner for Knight Frank Illawarra.
“The last major office building that was built in Wollongong was the ATO building about five years ago,” Mr Mulcair said. “The Wollongong CBD went with the tide of the residential apartment boom, but now that cycle has come to an end and commercial offerings are the flavour of the month.”
Plans have recently been approved for a 13,000 sq m building on Langs Corner, which is set to become the largest office building in Wollongong with construction expected to begin next year.