Brutalist Office Building Sold to Melbourne Syndicator

A brutalist Launceston CBD office building has been sold to a Melbourne-based syndicator for $22.5 million.

The concrete building, known as Henty House, was sold by Sydney-based property investment company Strada Group

Strada Group has held the property for more than 15 years after paying $11 million for the asset. The fund manager has five other office buildings in its portfolio—two in Canberra, and one each in Hobart, Townsville and on the Gold Coast.

The five-level building was purpose built for the Tasmanian government in the early 1980’s and is leased to the state and federal government, offering a weighted average lease expiry of more than six years.

The office building is in the central Civic Precinct near Royal Park and the Tamar River waterfront and occupies a 2517sq m site.

It provides its incoming owner with a net lettable area of 4700sq m and generates a net annual income of more than $1.5 million.

Ryan said that despite current market uncertainties buyers were continuing to pursue quality investment opportunities.

CBRE’s Melbourne Capital Markets Office team of Tom Ryan and Scott Orchard jointly negotiated the transaction with Tim Johnstone and Scott Alexander of Hobart-based agency Edwards Windsor.

“There is no question that buyers are reassessing their strategies and expectations following the significant change to the interest rate landscape,” Ryan said

“While the depth of interest has reduced, there is continued confidence in the market and solid transaction outcomes are occurring led by investors wanting to stay ahead of an anticipated buyer resurgence in the new year.”

▲ Strada Group spent millions in collaboration with the state government on refurbishing and improving the facility.

Orchard said while sale results have been limited through the middle part of the year as a market adjustment plays out, there is still considerable local, national and international capital looking for opportunities in prime and alternative markets as demonstrated by the sale of Henty House.

“While sale results have been limited through the middle part of the year as a market adjustment plays out, there is still considerable local, national and international capital looking for opportunities in prime and alternative markets as demonstrated by the sale of Henty House,” Orchard said.

The office building was named after the Henty family who emigrated from Sussex to Launceston in the early 1830s. The landmark building was designed by architect Peter Partridge in 1983 for the state government.

The office building’s government occupiers include Health and Human Services, Justice, Treasury and Finance, Premier and Cabinet, Police, Fire and Emergency Management in addition to the Federal Government, on a new 15-year term.

The property neighbours government-occupied buildings near Royal Park and the Tamar River waterfront.

Strada Group made its first attempt to sell the building in September 2019 with price expectations of $17 million, however, despite receiving more than 70 enquiries within the first few weeks it was advertised, the site was never sold.

Last year, CBRE sold the mixed-use Parliament Square development in Hobart for about $330 million to Spirit Super in the state’s biggest commercial property transaction.

Similarly underpinned by tenants such as the state government, the yield on the office component was 4.3 per cent.