Canadian pension investment manager PSP Investments and Charter Hall Group have acquired an office development under construction in Brisbane.
The 31 Duncan Street property is located in the fringe CBD Fortitude Valley precinct and will comprise a 25,000 sqm office building and a 464-bay public carpark once completed. The sale price was not disclosed.
The vendor has secured 70% leasing pre-commitments and will provide a rent guarantee over the balance of the space, with subsequent secured lease terms determining the final cost of the investment to the Charter Hall-PSP partnership.
The vendor is a private partnership, including Brisbane property identities Andrew King and Tim Mahony, that purchased the public carpark several years ago.
The vendor gained planning approval for a new office building constructed above the carpark and secured several pre-commitments, with tenants including Urban Utilities, CS Energy, Hutchinson Builders, RPS, CoreLogic and Secure Parking.
The building, scheduled for completion in December this year, is targeting design ratings of NABERS Energy 5.0 star and NABERS Water 4.0 star at completion.
Charter Hall said the building would be powered by 100% grid-supplied renewable electricity and would feature natural ventilation, operable windows and other sustainable features.
“Large 2,000 sqm floor plates, retail facilities and high-quality end-of-trip facilities combine to provide an excellent investment proposition,” Charter Hall Group Managing Director and CEO David Harrison said.
Charter Hall and PSP Investments have partnered for more than 10 years on various investments in Australia.
“We are pleased to extend our long-term relationship with Charter Hall and look forward to expanding our real estate investments in Australia,” Stéphane Jalbert, Managing Director, Head of Asia-Pacific and Europe, Real Estate Investments, at PSP Investments said.
“We have invested in the Australian real estate market for over 10 years and look forward to exploring further opportunities that respond to evolving needs in terms of building flexibility and sustainability, while also offering an attractive risk-adjusted return.”
The deal comes after Marquette Properties exchanged contracts to buy an office tower in Brisbane’s ‘Golden Triangle’ from Dexus in a $420 million deal this week.
Last December, Forza Capital purchased a B-grade office building in the Brisbane CBD for $41 million, while Cromwell Property acquired of 100 Creek Street in Brisbane’s CBD from ISPT for $184.7 million last October.
Outside of Queensland, the Straits Trading Company bought two office buildings in Docklands, Melbourne for $150 million last week, while Link REIT entered into a $596 million deal with Oxford Properties to invest in a portfolio of five offices across Sydney and Melbourne.
Earlier this month, AEW sold an A-grade office tower in the Sydney CBD to the Shayher Group for $199 million, as Allianz Real Estate and the National Pension Service of Korea (NPS) bought a 50% stake in Sydney’s Commonwealth Bank Place for about $625 million.
Australia’s office investment market recorded $21.9 billion in transactions in 2021, up 60% on the previous year, according to Real Capital Analytics.
Interested in the office market? Take a look back at Australia’s biggest single office sales in 2021.