The prominent IBM building in Brisbane has been sold for $49 million to interests associated with the US-based Hines Group.
Located at 348 Edward Street, the building attracted significant interest from both domestic and offshore buyers chasing core-plus assets. Their interest was attributed to arecent lack of value-add opportunities in the Brisbane CBD.
The deal with Hines Group was struck at an equivalent yield of 8.53%, and negotiated by CBRE’s Bruce Baker, Flint Davidson and Tom Phipps on behalf of private Brisbane company Harburg Investments.
It is the latest Brisbane acquisition for Hines, who also controls two Fortitude Valley assets at 100 Brookes Street and 825 Ann Street.
The acquisition of 248 Edward Street delivers the group an A-Grade tower with a net lettable area of 11,484 square metres.
There is potential to develop up to 50,000 square metres of gross floor area on the 1,349 square metre site, subject to the relevant planning approvals. The development area leaves potential for multiple uses including residential, student accommodation, medical uses, a hotel or commercial office space.
“The existing building is situated on one of the highest sites in the Brisbane CBD, affording panoramic views over King Edward Park towards the Brisbane River,” Mr Davidson said.
“The location near Brisbane’s major retail and transport amenities was one of the key draw cards, with prospective purchasers focused on opportunities to either reposition the existing asset or redevelop the site.”
CBRE revealed that over $7 million has been invested in building refurbishments and upgrades through a recent and significant capital expenditure program, designed to assist the repositioning of the asset.
The upgrades include a new ground floor lobby and foyer, a new chiller and a refurbishment of amenities on every level.
“This would minimise the need for future capital outlays and ensure maximum building efficiency and performance,” Mr Phipps said.
At present, IBM Australia is the building’s major tenant, providing 70% of the total building income. IBM Australia is a subsidiary of NYSE-Listed IBM, one of the largest companies worldwide with a market capitalisation of approximately US$125 billion - providing a blue chip holding income.