A former industrial building turned creative office space in Sydney's Surry Hills has been sold for $39.5 million.
The five-storey building located at 19 Foster Street, which underwent a major refurbishment in 2013, has 2,120 square metres of office space and 1,000 square metres of retail.
The vendor, West Australian real estate investment group Security Capital Australia, who bought the building for $22 million in 2014, sold the building to private investor Marks Henderson at a yield of 4.8 per cent.
The building has a WALE of 2.25 years and is fully occupied by mix of creative businesses including the TKD Architects, construction company Schiavello and The Guardian newspaper.
The deal was negotiation by Knight Frank’s Jonathan Vaughan and John Bowie Wilson in conjunction with Karbon Property’s James McCourt and Joshua Watts.
There had been strong buyer interest from offshore and local funds as well as private investors, Vaughan said, with the city's fringe suburbs appealing to businesses looking for distinctive working environments.
“We had significant buyer interest throughout the campaign, reflecting the ongoing confidence in Sydney’s fringe markets and the sale demonstrates the continued outperformance of the Surry Hills market in particular,” Vaughan said.
“With a vacancy rate of 3 per cent, the fundamentals in Surry Hills are some of the best in the country, underpinned by its position as the number one destination for the growing technology, advertising, media and information sector.”
Agents noted that the character building drew high interest due to its close proximity to central station and some of Sydney’s best restaurants, including Nomad, Chin Chin, Firedoor and Longrain.
“Not many buildings in the Sydney fringe accommodated as many industry leading companies as 19 Foster does,” Karbon Property director James McCourt said.
“This coupled with the heritage characteristics meant a highly competitive sale process was inevitable.”
Vendor, Security Capital Australia, which entered the Sydney market in 2009, has been selling off its office assets in Sydney, including four in North Sydney and St Leonards.
Mark Clohessy of Security Capital Australia underpinned the buildings value able to provide a platform to leverage the changing workplace demographics.
“The divestment of the asset is in line with our long track record of recycling capital and our investors are very happy with the result,” Clohessy said.