Listing a Litmus Test for Suburban Office Sentiment

A freehold office and retail building and adjoining service workshop in suburban Sydney will test buyer sentiment amid the easing of Covid-19 restrictions.

The Officeworks-anchored, four-level commercial building is located at 108-114 George Street, Hornsby, in Sydney's upper north shore. The A-grade building includes a mezzanine office area and three upper levels of office accommodation with basement parking for 86 cars.

Also part of the deal is an adjacent, single-level warehouse building at 2a Linda Street, currently used as a mechanic service workshop, with provision for 11 outdoor parking spaces.

The amalgamated asset, on a 2,267sq m corner site, with approximately 4,118sq m of net lettable area, houses three national tenants: Officeworks, Australian Unity and Midas.

JLL's NSW director of metropolitan sales and investments, Ben Hunter and associate director, Harry Sullivan, along with Knight Frank’s Dominic Ong, Tyler Talbot and Linda Zhu will manage the expressions of interest campaign.

While no price guide has been disclosed—"we're waiting to see what the market does"—a title search shows the site was last sold in 2017 for more than $25 million.

Hunter said interest in the "defensive" investment opportunity, being marketed on behalf of a local private investor, was expected from buyers both locally and abroad.

Given the security of Wesfarmers-owned Officeworks as the major tenant—one of the few bright spots in the Covid-19 retail landscape, buoyed by the move to home offices—Hunter said the Hornsby asset was indicative of a positive shift in buyer sentiment amid the easing of lockdown restrictions.

"The high-quality nature of the building is a key highlight, as we have seen a recent shift in interest towards well-appointed assets, temporarily moving away from value-add investment opportunities,” Hunter said.

In the wake of the mass dislodgement of workers from central business districts due to Covid-19, the listing is a further sign of life in suburban office markets, a week after the $20 million sale of an asset in Melbourne's south-eastern bayside with a similar defensive tenancy profile.

Expressions of interest for 108-114 George Street and 2a Linda Street, Hornsby close on Tuesday, 7 July.