Fierce competition in a packed Sydney auction room, dominated by savvy Asian investors has seen an outstanding sale price secured for a quality heritage office building in the heart of the Sydney CBD.
143-145 York Street sold under the hammer for $21.25 million to Sydney Hotel City Pty Ltd under Yeh’s Family on an initial yield of 3.3 per cent (4.47 per cent fully leased yield) through Jonathan Vaughan, Andy Hu and John Bowie Wilson from Knight Frank and Michael Burke from Steven Krulis Real Estate Consultants, who acted on behalf of the vendor, a private local investor.
The building is a well presented, nine level heritage office building, situated in an absolute prime location, with an extensive frontage to York Street and Market Row, directly opposite Sydney’s iconic Queen Victoria Building and Town Hall Station. The building offers a Net Lettable Area of 2,654.5sqm on a 468 sqm site.
According to Andy Hu, Associate Director – Asian Markets at Knight Frank, the new owners plan to convert the building into a boutique hotel, with approximately 75 rooms. “During the marketing campaign, we had three hotel operators interested in this building, as there are limited existing hotel opportunities in the market. Asian buyers also tend to better understand the hotel business, making more money off this sort of investment, with greater involvement in the day to day operations. The short Weighted Average Lease Expiry (WALE) of 1.4 years was also an added bonus” he said.
According to Jonathan Vaughan, Executive – Commercial Sales at Knight Frank, the auction result was something not seen in the commercial office market for some time. “Competition was fierce as a heritage building such as this offers a true point of difference, with open plan spaces, high ceilings, polished concrete floors and period features.
“In a market lacking real quality purchasing opportunities, 143 York Street was a rare opportunity to acquire a boutique building in a tightly held location, providing a range of opportunities to further increase value in the short, medium and longer term” he said.
The high profile retail suites, home to Red Eye Records and Country Garden, total 644.9 sqm across a basement and ground floor tenancy, and offer frontages to York Street over 17.29 metres. The office accommodation totals 2,009.6 sqm and floor plates in the building are approximately 340 sqm. All floors enjoy an excellent outlook over the Queen Victoria Building.