Singaporean asset manager Keppel Capital has snapped up an A-grade business park in Sydney’s Macquarie Park for $306 million.
The 35,000sq m office building at 4 Drake Avenue, known as Pinnacle Office Park, was purchased from local developer Goodman Group with a provided six months rental guarantee following completion of the purchase.
The estate, with its two A-grade towers, is home to major corporations including gambling machine manufacturer Aristocrat and Japanese multinational technology company Konica Minolta.
The complex has a weighted average period to lease expiry of 4.8 years and the existing leases include annual rent escalations of between 3 and 4 per cent.
The property includes a child care centre, gym, end-of-trip facilities and cafe and is within close proximity to Macquarie Centre, Sydney’s largest suburban shopping centre.
Keppel Capital chief executive Paul Tham said the acquisition will allow the group to gain exposure in one of Sydney's key metropolitan office markets—recognised as the second largest office market in New South Wales.
“In the wake of Covid-19, we believe demand in Australia for quality and well-networked metropolitan locations will increase as more companies seek cost-effective solutions or adopt a hub-and-spoke business model for office locations,” Tham said.
“With an initial net property income yield of 5.25 percent, the acquisition of Pinnacle Office Park is in line with our active portfolio optimisation strategy to improve Keppel REIT’s income resilience and portfolio yield.”
The property, which is currently 96.3 percent occupied as of June, will be the REIT’s first large footprint business park asset and will join a portfolio dominated by nine high rise office towers located in central business districts across Asia Pacific.
The purchase by Keppel comes as demand for commercial real estate in satellite hubs such as Parramatta, North Sydney and Macquarie Park is set to surge as businesses relinquish CBD space and begin to shift workers into the back office and fringe markets.
Sydney CBD recorded its lowest level of demand in 11 years in the six months to July, with negative net absorption of 66,000 square metres as an extra 25,162 square metres of office space came into the market.
The sale of the northern Sydney office asset by Goodman will help further its focus on industrial property as the group continues to benefit from rising warehouse space demand due to the growth of e-commerce.
Goodman’s assets under management increased 12 per cent to $51.6 billion over the 12 months to June 30, while its global development pipeline grew to $6.5 billion across 46 projects and is expected to exceed $7 billion over the next six months.
Its development pipeline now includes a 200,000sq m fulfilment centre to be built in Sydney for Amazon.