ARA Asset Management is marketing an office tower in Perth, Australia at an asking price of A$90 million ($65 million) in a bid to exit the nearly filled building as the market begins to rebound following the border reopening, marketing agent Cushman & Wakefield reported Thursday.
Singapore-based ARA has put 81 St Georges Terrace in Perth’s central business district on the market after completing refurbishments in 2017 and leasing out 98.7 percent of the space to a pair of anchor tenants, including a government office.
“Investors like some Perth exposure in their portfolios to complement East Coast assets and favour centrally located St Georges Terrace assets such as 81 St Georges Terrace,” said Josh Cullen, Cushman & Wakefield’s head of capital markets in Australia. “The security of income to the government of WA (West Australia), combined with the core CBD location will be attractive to local and offshore investors looking for an Australian safe haven investment.”
81 St Georges Terrace is the second of two office towers to hit the market along the commercial strip last week, showing signs of a rebound in a Perth office market which has suffered some of the highest vacancy rates among central business districts nationwide, based on the latest quarterly report by Dexus Research.
Over A$7M in Rental Income
The asking price translates to around A$6,885 per square metre of the building’s net leasable area of 12,233 square metres (131,670 square feet) for office space and 838 square metres for retail units on the ground floor.
Located in the middle of St Georges Terrace street in the city centre, the building is nearly fully occupied by its anchor tenants — the Minister of Works of the West Australian government and Snap Fitness gym — with a weighted average lease expiry of 3.9 years. Cushman & Wakefield said the property can yield A$7.6 million worth of leasing income per year once occupancy hits 100 percent.
The marketing agent said the period for international expressions of interest will close by 8 June.
“Perth is the resources capital of Australia, and the increased leasing demand is directly related to the current strength of the mining, oil and gas industries and the flow down effect for downstream businesses,” said Digby Sutherland, the property firm’s joint managing director for Western Australia. “Now that our state borders are open, and investors can visit Perth to inspect properties we expect significant interest in 81 St Georges Terrace.”
ARA, now part of ESR Group, is exiting the 1987-vintage asset after paying A$86 million to buy the property from an entity linked to local businessman Nick Tana and his family in 2016, following Tana’s reportedA$38 million purchase of the building in 2009.
On the easternmost side of the country is another commercial block owned by the Singaporean firm: the 16-storey building at 133 Mary Street in central Brisbane that ARA bought for A$97 million in 2019 and then renovated.
In its home city, ARA is selling an office tower in Singapore’s Bras Basah area for S$800 million ($588 million) after completing renovations and securing its anchor tenant, Lazada.
Mingtiandi reached out to the company for comment but did not get a response by the time of publication.
Surge of Perth Listings
A few minutes’ walk along the Perth commercial strip is another office block that was put up for sale this week, with JLL marketing the 18-storey building at 216 St Georges Terrace, according to a LinkedIn post. International expressions of interest will end on 9 June.
The Perth CBD’s office leasing demand in the first quarter surged to its highest level in the past 10 years as the government finally reopened the border of Western Australia in March, said Sutherland of Cushman & Wakefield.
Given the softer blow of the pandemic in the area, occupancy levels in the city’s office market remained the highest compared with other CBD markets in Sydney, Melbourne and Brisbane, according to the Dexus report.
Dexus said Perth’s market was “slow and stable”, with vacancy, rents and yields finishing flat at the end of 2021.
“A considerable state budget surplus in conjunction with a strong resources sector and a limited supply pipeline offer green shoots for the long-ailing market,” the report said.