Canberra developer Doma Group has sold its first office project in Newcastle's Honeysuckle waterfront precinct to IOOF Investment Management for $52.2 million.
The seven-level building, located at 18 Honeysuckle Drive, was completed in 2017 and has a net passing income of around $3.24 million excluding GST.
It features 6,524 square metres of fully-leased office space underpinned by several top tier tenants, including the NSW government.
The A-grade building has a weighted average lease expiry of 7 years and sold on a net passing yield of about 6.2 per cent.
According to selling agent Colliers International, the transaction represents one of the highest-priced office sale in Newcastle to date with other significant commercial sales including $56.7 million in 2015 for 266 King Street, and $46.6 million in 2016 for the NIB building at 22 Honeysuckle Drive.
Peter Macadam, Paul Powderly, Matthew Winter and Michael Montelibano brokered the deal.
“A prime location, the modern construction and high specification, a mix of quality government and private tenants and the strength of the local economy drew us to this opportunity,” IOOF Investment Management senior portfolio manager Simon Gross said.
“We are very pleased to add 18 Honeysuckle Drive to our portfolio given the strong fundamentals of the Newcastle market.”
“On average, tenants have nearly seven-years left on their leases and we look forward to building strong partnerships with each of them.”
The vacancy rate of Newcastle’s most expensive A-grade office space is now just 2.8 per cent, down considerably from 6.4 per cent the year before.
Last month Doma commenced construction on a 15,000sq m office building to be anchored by the NSW government upon completion.
Doma won a government tender to acquire the store site early last year after the state government bought The Store for $11 million in 2015.
The development is Doma's seventh investment in Newcastle with construction marked for completion late-2020.
The developer is also planning a nine-storey mixed-use building in Merewether Street to be known as The Crossing and Huntington apartments on Honeysuckle Drive.