Competition expected

A seven-storey, 6112-square-metre city office building hit the market this week and it’s expected to attract significant interest from investors.

The building at 73 Northbourne Avenue has been listed for sale on behalf of Hume Partners Property, with CBRE’s Andrew Stewart and Scott Gray-Spencer and JLL’s Michael Heather and Rob Anderson, to market the 100 per cent leasehold interest in the asset.

Hume Partners Property managing director Scott Davies says the sale follows a year of significant investment activity with about $435 million in office assets traded in 2015. This is the highest volume of sales since 2009.

Mr Davies says competition is expected for Canberra assets this year as there is a shortage of investment grade assets on the eastern seaboard.

“We identified that 73 Northbourne Avenue would be an attractive proposition for purchasers in light of the current market conditions, whereby it’s becoming increasingly difficult to secure investment grade assets in Sydney, Melbourne and Brisbane,” Mr Davies says.

Number 73 Northbourne Avenue is one of the most recognisable office buildings in the city. On the corner of Barry Drive at the CBD’s entrance, the A-grade building boasts a striking glazed facade and strong environmental credentials.

The building was constructed in 1987 and significantly refurbished in 2007 and 2015. A comprehensive capital expenditure program has the building performing to a 4.5-star NABERS Energy rating, with a target of five stars for its next review in December.

JLL ACT’s head of sales and investment Michael Heather says the building benefits from flexible floor plates, generous natural light, a high car parking ratio and exposure to major arterial roads.

CBRE’s Canberra managing director Andrew Stewart says 73 Northbourne Avenue’s diversified cash flow and quality tenants will be a key draw card for purchasers. The asset is primarily leased to Australian Fisheries Management Authority and Dixon Advisory alongside Bankwest, Technology One and FEI Australia.

Canberra’s high yields will be another attraction to potential investors, according to Mr Stewart.

“Astute investors are viewing Canberra as a classic ‘counter cyclical play’ at a time when commercial leasing conditions are strengthening, particularly in the A-grade sector,” Mr Stewart says.

Mr Heather says Canberra’s leasing conditions have improved during the past 12 months, strengthening investor confidence.

“The Civic precinct, in which 73 Northbourne is situated, was one of the more consistent and solid performing office markets in Australia in 2015.”

“Key indicators such as a solid full year net absorption rate and a reduction of sublease space, suggests that the market has passed its cyclical trough period, and positive total return expectations over the medium term can be expected.”

Expressions of interest close on Friday, March 11.