Cromwell Property Group has bought the Chesser House office tower in Adelaide from Harmony Property Investments and Arc Equity Partners for $81.35 million, reflecting a passing yield of 5.12%.
Located at 95 Grenfell Street in central Adelaide, the A-grade office offered 11,161 sqm of net lettable area across 11 levels. The deal represented a core capitalisation rate of 5.5%.
The property was leased to national and global tenants including the Attorney-General’s Department, NDIS, Ombudsman SA, CyberCX and Serco, with a 6.1-year weighted average lease expiry (WALE).
The office had been refurbished with a new lobby and lounge; new end of trip facilities for 37 bikes with opportunity for future expansion; a new entry canopy to Grenfell Street; modern, upgraded lift cars; and new fire services, BMS, air conditioning, and solar upgrades.
Chesser House was located in the heart of Adelaide’s core office precinct near Adelaide’s premier retail precinct, Rundle Mall and the rejuvenated Pirie Street.
Knight Frank’s Guy Bennett and Colliers’ Paul Van Reesema and Alistair Mackie negotiated the deal.
“This repositioned A-grade tower is perfectly placed to capitalise on Adelaide and South Australia’s growing economy and the CBD office market, and presents a unique opportunity to activate Chesser Street,” Bennett said.
“The ground floor of Chesser House was transformed in 2017, incorporating a new entry canopy and what is now one of Adelaide’s best lobby spaces featuring open plan meeting and working lounge areas.
“To date, $20 million has been expended on both base building related works and various tenancy fit-outs at Chesser House, in addition to a further $10 million flowing from the recent leasing incentives.”
Van Reesema said Chesser House was at the heart of the resurgence of the Adelaide CBD, surrounded by the activation and significant refurbishment of older stock and new developments.
“Nearby notable developments include the recently built Rundle Place and Bendigo Bank, as well as the upcoming 30,000 sqm office building at 83 Pirie Street and the 40,000 sqm mixed-used development at 60 King William Street,” Van Reesema said.
“Both projects are largely pre-committed to State and Commonwealth Government occupiers, continuing the support of strong occupancy and high underlying capital growth into the future.”
In March last year, Cbus Property started its $300 million development at 83 Pirie Street in Adelaide’s CBD.
The Pirie Street development would comprise a 20-storey A-Grade office tower, an expansive lobby with adjoining cafe and 500 sqm wellness centre.