Centuria Divests Sydney Fringe Office Block for $116m

Centuria says the sale of its A-grade office building in Sydney’s south for $116 million signals a turning point for the sector in the city.

The Australasian real estate funds manager has now completed its Centuria ATP Fund with the sale of the office asset in South Eveleigh to funds managed by Marprop Real Estate Investors and Gresham Property Funds Management.

Centuria acquired the building at 13 Garden Street in April, 2016 along with two other assets, BioMed Building at 1 Central Avenue and the Belltower at 6 Cornwallis Avenue, as part of the fund. 

The six-storey asset, about 7km south of the CBD by road, has a net lettable area of 11,203 square metres.

Following this final divestment, the fund would facilitate a 20 per cent IRR and delivered a circa 10 per cent average annual income yield during its term, the funds manager said. 

Centuria head of Funds Management Jesse Curtis said that since 2016, the South Eveleigh area had undergone significant regeneration and urbanisation, including improved transport infrastructure and connectivity, resulting in strong rental growth within this prime fringe location. 

“We believe this [sale] signals a turning point in the metropolitan office market, and a resurgence in investor appetite for modern, sustainable properties,” Curtis said.

“This, coupled with growing evidence of momentum in office-centric workforces led by government departments and large corporations, point to positive medium-term tailwinds.

“[As well,] key economic drivers including population growth spurring white-collar employment and anticipated future office supply contracting as economic rents are expected to outstrip prevailing market rents, provide compelling fundamentals for office investment.”

The office building is 250m from the new Waterloo Metro station and Redfern’s Southern Concourse, the latter providing direct connections to six of eight Sydney heavy rail commuter lines.

Cushman & Wakefield’s Steven Kearney, Jack Harrison and Kenny Duncanson, and Knight Frank’s Jonathan Vaughan, acted on behalf of Centuria.