Commercial real estate services and investment firm CBRE Australia has announced that the northern end of Sydney’s western corridor precinct has seen a marked increase in transactional activity since Lend Lease’s $6 billion Barangaroo became a reality in late 2009.
CBRE has been tracking transactions above $5 million and found that sales have significantly increased since the mid-2000s. The early half of the 2000s saw an annual average of $113 million in transactional activity, but since late 2009, when Barangaroo was announced, there have been three deals each worth $100 million.
One of the more recent transactions was the sale of a 12,570sqm Sydney tower strategically located on 117 Clarence Street in the city of Sydney to Altis Property Partners for $61.25m. This sale exemplifies the growth benefits that come with the Barangaroo development.
Rohan Ramsay, the CBRE Director of Capital Markets, says this increased financial activity can be attributed to the expected benefits building owners will reap once Barangaroo is complete.
“Barangaroo will bring an influx of new retail and hospitality amenities for office workers to enjoy. Transport links are also being rejuvenated, with additional ferry stops, footpath widening and the currently under construction Wynyard Walk.”
Furthermore, an approximate 285,000 sqm of the development, which is set to be commercial space, will shift the geographical centre of the traditional CBD office market towards the northern end of the western corridor.
This emergence of the northern end of the western corridor as a more centralised location will prompt the conversion of C and D grade office accommodation into residential or serviced apartments.
Already several properties, including 161 Clarence Street purchased by Crown and 333 Kent Street acquired by a Chinese development company, have been bought with residential conversion intentions. Investors who realise the benefits of being part of a growing precinct will start securing these properties before prices increase accordingly.
“Occupiers are drawn to the area as there is perceived good value in the northern end of the Western Corridor compared to other precincts within the CBD and even North Sydney. They benefit from lower rental values as well the significant growth and improvements the area is seeing,” says Ramsay.
Sydney’s western corridor comprises the strip of offices incorporating Hickson, Shelley and Kent roads from Circular Quay to Darling Harbour.
Barangaroo, owned by the NSW Government, is a 22 hectare former container wharf that is set to be transformed into a public, residential and commercial precinct with a waterfront promenade running the length of the site. 23,000 people are expected to live and work in the precinct over time, with 33,000 people expected to visit Barangaroo each day.
