Suburban North office space in demand as CBD and North Sydney tenants displaced
14 December 2017, Sydney – A commercial office building and separate land parcel at Lane Cove has sold for a combined price of $56.6m. With the Sydney CBD and North Sydney office markets tightening, strong demand increases as investors look to capitalise on displaced tenants moving to the outer suburbs.
The commercial building comprises of a 9-level office building of around 9,250 sqm and is found at 18-20 Orion Road. Reflecting a capitalisation rate of 7.11% the almost fully leased (88%) building has a 2.48 year WALE and boasts high-profile tenants including Motorola, Netcomm Wireless and Dental Corporation (BUPA).
The vacant land parcel (14 -16 Orion Rd) is 7,922sqm. The combined site area of both sites is 16,860sqm.
The sale was managed by Knight Frank’s Angus Klem, Arland Domingo and Dominic Ong on behalf of a private investor.
Knight Frank’s Managing Director, North Sydney, Capital Transactions, Angus Klem, said the property offers a long term outlook for astute investors. The new owners will benefit from the long term investment as well as the increase tenant demand in the Lane Cove precinct.
“This is an outstanding investment opportunity for an almost fully leased office building with development upside. With excellent tenant retention and average rents at $296/sqm net, which compare favourably with the surrounding markets of Macquarie Park, North Ryde and Chatswood, it offers secure return on investment.
“In the longer term, this property offers investors a chance to get in on the ground floor of Lane Cove’s fast-growing office market. With rising rents pushing tenants out of the CBD and North Sydney into the outer suburbs, the development potential offers investors the opportunity to capitalise on future demand.”
“The significant levels of stock withdrawals continue to benefit the Sydney suburban office market. Over the 12 months to July 2017, a total of 57,428sqm of secondary stock has been withdrawn across the North Shore and Macquarie Park market. In conjunction with 126,907sqm of secondary stock taken offline in the Sydney CBD, this has resulted in tenant demand cascading to the suburban markets and strong effective rental growth. The average net effective rent in the Suburban North market, including Lane Cove, has increased by 11.18% over the past 12 months.”
“We hear a lot about the way millennials are disrupting the workforce and challenging the status quo.
“It’s a long-term consideration, but savvy investors with a knack for spotting trends are going to see this property for much more than the outstanding and immediate financial return it offers, but as a long-term strategic investment which will pay its own way in the meantime.”
Built in 1991, the nine-level commercial office building includes a 500sqm childcare facility with dual street frontages. The building has a readily subdivisible floor plate of 1100sqm with a central core, three elevators, continuous floor to ceiling glazing, and balconies on all levels. The property includes 342 car parks, the majority being covered parks over three basement levels. The building has a NABERS rating of 3.0 stars.
Located within the Lane Cove Business Park, Orion Road is within close proximity to a host of global corporations including, Cochlear, Harley-Davidson, Optus, KCI Medical and Storage King. The business park is accessed off Epping Road via Samuel Johnson Way, with connectivity provided by comprehensive bus services to surrounding major centres including the CBD, North Sydney, St Leonards and Chatswood.
The whole Lane Cove Business Park is set to benefit from the transformation of the North Shore with $73.4 billion being spent on infrastructure over the next three years.