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A private investor has snapped up a B-grade office tower at 333 Adelaide Street in a deal that could shift the needle on office transactions in Brisbane.
Stadia Capital acquired the 14-storey Golden Triangle tower for $41.75 million on behalf of a private investor at a below-replacement value of $5567 a square metre.
Construction firm Icon bought the site from the Australian Workers Union for $16.6 million in 2016 at a rate of $2000 a square metre, reportedly one of the cheapest buildings in Brisbane’s CBD at the time.
The average B-grade office transaction in the past 18 months in Brisbane was $8000 to $10,000 a square metre.
The office tower comprises 7499sq m of net lettable area on a 911sq m site, which had recently undergone an $8.35-million capital expenditure program.
Cushman and Wakefield agents Mike Walsh and Peter Court managed the transaction alongside asset managers Peter and Bill Costello of Costello Group.
“The tower’s income is underpinned by a 12-year lease to Australian Moreton Education and is further reinforced by a diverse occupancy mix, including the Australian Workers Union and Sydney Business Travel Academy,” Walsh said.
“This tenancy mix ensures stability and a strong foundation for sustained growth.
“When you combine this with a 9 per cent initial yield and a below replacement cost argument at $5567 a square metre gross when the average of B-grade office deals in the preceding 18 months were trading at $8000-$10,000 a square metre, it makes for a compelling investment that has forward priced risk at an attractive level.”
Asset manager of the building and director of Costello Group Peter Costello said the appointment of an independent asset manager had paid dividends.
“During the past four years, Costello Group has overseen significant capital upgrades to enhance the leasing credentials of the building attracting a significant increase in leasing activity and reducing the building vacancy to 9 per cent whilst securing long-term rental returns,” Costello said.
