Strata sales hit record prices as investors dive in

“We have found the most active buyer groups have been jewellers, real estate property groups and café and bar operators,” he said. “A 19 sq m site at suite 303/Level 3, 147 King Street in Sydney sold for $290,000 in August to jewellers.”

In Melbourne, Colliers’ Anthony Kirwan and George Davies have seen an uptick in demand for strata offices. They recently sold Suite 301, 20 McKillop Street for $1.03 million to a private investor; Part Level 10, 15 Collins Street for $520,000; and, on the city fringe, Level 3, 8 Palmerston Crescent, South Melbourne for $7.55 million.

“Recently, we’ve seen a distinct flight to quality in the marketplace,” Kirwan said. “It’s fair to say assets that lack differentiation or unique characteristics are somewhat slowing down, as buyers gravitate towards prime assets with strong lease covenants and/or scarce physical characteristics.

“Owner-occupiers are participating more aggressively than investors in the strata space as their acquisition motivations are different and less affected by the interest-rate climate. As such, we’re experiencing a two-speed market in the CBD and city fringe strata market.”

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JLL’s capital markets NSW associate director, Willem Watson, sold a property with vacant possession on the fifth floor of 261 George Street in Sydney before the auction, achieving a rate of $20,627 a sq m – a benchmark for the precinct.

The premium strata office sold for a building record, and later leased for a building record, in an amalgamation of the demand for strata assets and high-quality fitted office premises.

“This sale comes hot on the heels of a surge in activity for Sydney strata offices following a number of record-breaking transactions taking place in the CBD,” Watson said.

“This opportunity appealed to a wide range of investors and future owner-occupiers, and we received 10 requests for the contract of sale following 26 inspections of the asset.”

Watson added that with $27 million of underbidder capital for the asset, “it’s clear that demand remains robust for high-quality strata suites in Sydney CBD, and we anticipate this to continue throughout 2022 and into 2023”.

On the leasing side, demand is also rising for smaller spaces from a range of tenants in the small-to-medium consulting businesses.

JLL’s office leasing NSW senior executive, William Conry, leased the sold strata office at 261 George Street at a record rate for the building of $1200 a sq m.

“Level 5 of 261 George Street presented a remarkable opportunity to occupy a modern, turnkey fitted floor that is perfectly configured to provide either a whole floor premises or two suites,” Conry said.