A 27-storey office tower in the Sydney CBD has sold at a loss as Google’s headquarters in the city, and Nine’s in Melbourne, come to market.
The office tower at 1 Castlereagh Street has been offloaded for $196.4 million by ‘the King of Toys’, the Hong Kong investor Francis Choi.
The new owner is SLMC Property Australia., a subsidiary of Singapore’s Sim Lian Metro Capital Pte Ltd, itself a private real estate fund management business managing a portfolio of office and retail assets in Australia.
The building was last sold by Blackstone to Choi, the billionaire founder of Hong Kong company Early Light International—the world’s largest toymaker— in 2019 for $220 million.
The sale is a considerable devaluation over that period as the office market continues to flag post-Covid.
The property is on a 1164 sq m site on the corner of Castlereagh and Hunter street, opposite the new Sydney Metro at Martin Place Station.
The freehold asset underwent a $24-million refurbishment in 2020 after Choi acquired the building, including the addition of two storeys of penthouse office space.
The owners poured another $13 million of capital expenditure into a new lobby, façade maintenance, ground floor retail and reconfiguration for a total capex of $37 million.
The revamp means the building now provides 12,418sq m of total net lettable area (NLA) including 11,694sq m of quality office accommodation over 23 levels and 724sq m of retail space on the ground and lower ground floors.
It is currently 85 per cent let to firms including Dental Boutique, Citrus Group, the Recruitment Company, Verkada Australia, Wrays and Red Bottle.
Knight Frank agents Dominic Ong, Paul Roberts, Ben Schubert and Jonathan Vaughan ran an off-market campaign for the site.
“Offshore investors, particularly those from Singapore, have been very active in Sydney’s office investment market this year, with the sale of 1 Castlereagh Street being the latest purchase,” Ong said.
Hong Kong’s Choi in 2019 acquired full ownership of North Sydney’s Northpoint Tower after buying out the remaining 50 per cent for $300 million.
Early Light took a 100 per cent interest in the Australian Exchange Centre in Sydney’s CBD for $335 million in 2017.
Meanwhile, GPT Group is offloading two landmark assets: the headquarters of Google Australia in Sydney, and Media House in Melbourne, which is leased to the Nine media group.
Collectively the assets are valued at more than $450 million, GPT said.
Workplace6, home to Google Australia’s headquarters and Built in 2008, comprises 18,196 sqm of NLA across the 5694 sqm site.
It was the first office development in NSW to achieve a 6 Star Green Star rating and has achieved carbon neutral status.
Google recently acquired a neighbouring property, 42 Pirrama Road, for $170 million, and is spending $72 million on its refurbishment.
And in Melbourne, the A-Grade 655 Collins Street, built in 2009 opposite Southern Cross train station, is fully leased to Nine until 2029.
It offers 16,620 sqm of NLA and has a 5.5-star NABERS Energy rating.
Cushman & Wakefield and CBRE are marketing the assets as the shifting sands of office ownership signal a repositioning for the market.
The Property Council of Australia’s July 2024 office market report showed that office vacancy rates nationally fell from 14.8 per cent to 14.6 per cent in the previous six months.
It also reported big differences between the state capitals, with Sydney’s CBD office vacancy rate falling from 12.2 to 11.6 per cent and Melbourne’s vacancy rate rising from 16.6 to 18 per cent.
As a result, a number of major office assets have been put on the block this year, including Afterpay’s Sydney HQ and Jetstar’s Collingwood office.
