Canadian giant Brookfield is taking a landmark of Perth’s skyline to market with price expectations of $350 million.
The 51-storey tower at 108 St Georges Terrace, one of Perth’s best-known office buildings, was developed in the late 1980s by West Australian businessman Alan Bond.
The 38,300sq m, A-grade office building has traded once in the past three decades after being picked up by asset manager Brookfield in 2007.
It is understood Brookfield has spent upwards of $100 million improving the building during the past decade, with a major overhaul in 2016 setting it up for sale.
JLL’s Simon Storry, John Williams and Luke Billiau with CBRE’s Aaron Desange, Michael Andrews, Flint Davidson and Nicholas Volk have been appointed to market the property.
"International investors are actively seeking strategic assets across Australia's CBDs, particularly high-quality office product in key locations,” Storry said.
“With the reopening of international borders we are seeing new capital sources emerge and the removal of domestic travel restrictions has been hugely positive for the Perth office investment market.”
The building is 87 per cent occupied with an average weighted lease expiry of 3.6 years.
Key tenants include global mining and metals company South32, ASX-listed financial services firm Pioneer Credit, Asia’s third largest office space provider The Executive Centre and global law firm Norton Rose Fullbright.
The office tower is complemented by the three-storey, 1897-built and heritage-listed Palace Hotel, a fully refurbished character-style building offering offices, conferencing facilities available for tenants use, and ground floor hospitality operated by Meat and Wine Co.
Desange said the asset was outperforming the headline vacancy rate of 19.7 per cent across the Perth CBD and the A-grade vacancy rate of 18.8 per cent recorded across the first three months of the year.
“No single occupant represents more than 25 per cent of the property’s income stream, allowing for the retention and expansion of existing tenants within the building,” Desange said.
“This aligns well with the likelihood of constrained office supply from 2025 to 2027 helping support future rental growth prospects.”
Perth’s office market has been heating up, with two other buildings on prestigious St Georges Terrace being listed this year.
Fortius Funds Management is understood to be representing offshore capital on the potential acquisition of Allendale Square at 77 St Georges Terrace, which is expected to sell for about $230 million after a campaign that began in September.
ARA Asset Management has put 81 St Georges Terrace on the market with hopes for more than $90 million. The building is leased to the Western Australian government.
The West Australian economy has strengthened in recent years, leading to relatively buoyant leasing demand, which was underpinning investor interest in better quality buildings.
According to Knight Frank, prime net face rents are in turn edging higher, rising by 0.7 per cent in the final six months of 2021 to be up 1.6 per cent over the year.
Investment activity also lifted last year, with volume totalling $1 billion, over five times higher than 2020 and 18 per cent above 2019 levels.
The outlook for the Perth market remains positive with strong net absorption expected to drive down vacancy further this year and growth in net face rents expected to edge up another 3 per cent.
