Office-to-residential conversions are on the rise with the prevailing convergence of Australia’s chronic housing undersupply and a challenged secondary office market.
Sydney-based build-to-rent investment manager Apt.Residential has stepped into the fray with the purchase of two commercial buildings at inner-city Ultimo.
It has secured the early 1900s-built assets in the NSW capital from Mirvac in a $55-million deal.
The fledgling build-to-rent player is planning an adaptive reuse to transform the buildings into rental apartments and studios.
Amalgamated by retailer Grace Brothers in 1949 and used for storage and warehousing, the historical brick buildings at 1-3 Smail Street have a net lettable area of 7796sqm and are let to commercial tenants.
Managing director Matt Carolan said the company would now begin work on a development plan that would “honour the buildings’ heritage while maximising liveability for future residents”.
“The building’s heritage value to Ultimo and Sydney is important,” he said. “By maintaining and restoring certain design elements, the site’s history will be celebrated in our development application.”
The Smail Street site is close to Broadway Shopping Centre and within walking distance of Central Station, the city and two major universities.
“We think it is a prime location for high-quality rental apartments and studios,” Carolan said.
In May, Apt.Residential announced it had won the backing of Dutch pension fund manager PGGM, which had committed an initial $700 million to the new platform to roll out 2500 apartments during the next five to seven years.
The partnership bolstered its seed capital to a total of $1.5 billion that will fund the development of up to eight build-to-rent projects, most of them in Sydney.
“When the time is right we’ll be in Melbourne, we’ll be in Brisbane and tier-two cities like Newcastle,” Carolan told The Urban Developer. “The business plan was always that the first few assets would be secured and settled in Sydney but it’s a national mandate.”
Meanwhile, it has wasted no time deploying its supercharged development war chest, with initial site works progressing on a $280-million “village-style” build-to-rent project spanning an entire block at Meadowbank in Sydney’s inner north-west.
The development will comprise 291 studio, one, two and three-bedroom apartments across four buildings rising up to eight storeys.
As well, it is touted to become a new vibrant hub for Meadowbank, 15km from the CBD, including more than 4000sq m of street-facing retail and hospitality amenity.
