AEW has sold an A-grade office tower in the Sydney CBD to the Shayher Group for $199 million, as local and international buyers target office assets in the financial capital.  

The office asset at 10 Barrack Street offered 9,627 sqm of net lettable area and sits on a 1,040 sqm site, with a 3.5-year weighted average lease expiry (WALE). 

The 13-storey tower, which recently underwent a $7.8 million capital works programme, held a 5-star NABERS energy rating, 4.5-star NABERS water rating and was certified carbon neutral by Climate Active. 

“The divestment of 10 Barrack Street marks what we believe to be a successful turnaround story, whereby we acquired a well-located property, in an evolving precinct that required a significant capital improvement,” said Jason Maxwell, Country Head – AEW.   

“As a result of the upgrades we’ve implemented, the building has attracted strong tenants on favourable terms, reinforcing the success of the program.” 

The transaction was negotiated through CBRE’s James Parry and Flint Davidson, in conjunction with Cushman & Wakefield’s Josh Cullen and Mark Hansen. 

James Parry, State Director of Capital Markets at CBRE, said there was substantial buyer interest for well-located Sydney CBD office assets, with the continued strength in the leasing market underpinning strong pricing outcomes.  

“With an extensive refurbishment of the building having only just been completed, the new owner will enjoy significant rent reversion over the coming 36 months as existing leases expire,” said Parry. 

Mark Hansen, International Director – Capital Markets at Cushman & Wakefield, said the property was an attractive investment that generated significant buyer interest ranging from privates to institutional investors locally and abroad. 

“Purchasers were drawn to its super core CBD location, proximity to public transport on a lot size that has become very rare in the CBD,” said Hansen. 

This week, Allianz Real Estate and the National Pension Service of Korea (NPS) bought a 50% stake in Sydney’s Commonwealth Bank Place, also known as Darling Quarter, for about $625 million.  

Other Sydney office deals include CapitaLand Integrated Commercial Trust’s purchase of a half stake in the 101 – 103 Miller Street building in North Sydney for $422 million, following its acquisition of two grade-A office buildings in Sydney for $330.7 million in December last year.   

Abacus Property acquired a Sydney CBD office building for $250 million, while Stadia Capital purchased a Harry Seidler-designed office building in North Sydney from a consortium of investors for more than $80 million.   

Dexus recently sold its interests in two offices in Sydney’s CBD and Parramatta totalling $555m, in addition to another Sydney CBD office for $385 million.   

The Australian Unity Office Fund sold a grade-B office in Parramatta for $66 million, as Keppel REIT purchased a grade-A office development in North Sydney for $327.7 million.  

2021 was an important year for Australian office real estate investment – check out Australia’s biggest office property deals of 2021.