An “A-grade” office building located within Wollongong’s CBD has been sold to an offshore investor for $46.1 million.
Located at 43 Burelli Street, Corporate Square comprises 9688sqm lettable office space and 92 car parking spaces.
According to global firm Knight Frank, with a record initial yield of 7.38 per cent the sale sets a new benchmark for the area.
Corporate Square is located in the heart of the Wollongong CBD, adjoining the Wollongong City Council chambers.
It was sold via an Expressions of Interest campaign, the property reportedly receiving considerable interest from offshore and local investors due to its strong tenancy profile, security of income and significant rental growth upside.
The sale was managed by Knight Frank’s Ben Mostyn and Tyler Talbot on behalf of Folkestone in conjunction with CBRE.
Knight Frank’s managing director Illawarra Ben Mostyn said the recently refurbished property with a blue-chip tenancy was a huge drawcard for investors.
“This is an outstanding result for an office investment in Wollongong,” he said.
“The strong sales price is a testament to the growing demand for A-grade investments outside of metropolitan Sydney due to Sydney’s tightening yields.
“Selling at a record initial yield of 7.38 per cent, Corporate Square has set a new benchmark for Wollongong real estate.”
Mr Mostyn said in this instance three of the top bidders were from overseas.
“We’re starting to see a lot more interest in the region from abroad,” he said.
“People are seeing that it’s an extension of Sydney... People have spent a lot of time working on Sydney.
“The offshore interest that has bought into Sydney has spent many years (doing) a lot of calculated research into Sydney.
“They’re basically adding it in as one of the metropolitan suburbs of Sydney now.”
Knight Frank’s director institutional sales Tyler Talbot said the new owners will benefit from growing demand for office space in Wollongong. “Over the past 18 months we’ve noticed a strong growth in demand for A-grade office space in Wollongong,” he said.
“Corporate Square is already one of Wollongong’s most sought after, A-grade office buildings thanks to its high-profile government occupancy and significant rental growth, and should result in a profitable, long-term investment for the new owner.”
With 98.7 per cent occupancy, the building offers a net passing income of about $3.40 million per annum, with a tenancy profile made up of about 73 per cent federal and state government tenants.