Brookfield wins interest in $300m Brisbane tower as interest rates derail market

Brookfield is selling 240 Queen St in Brisbane

Canadian funds giant Brookfield has won strong interest in a Brisbane skyscraper it is offloading with Quintessential Equity understood to be going into due diligence on the near-$300m asset.

The impending sale of 240 Queen St strengthens the city’s claim to be one of the country’s most active office property markets, with occupancy holding up and investors backing its performance.

Brisbane has experienced a run of sales and the broad repricing of office towers which derailed several deals last year as interest rates jumped also been handled by the market.

While the parties have declined to comment, Quintessential Equity is considered a savvy buyer with a focus on quality assets, with the building’s long lease to the Commonwealth Bank a key drawcard.

The purchase would also give Quintessential Equity an exposure to the city which is expected to benefit from the 2032 Olympics. Even ahead of that time, Brisbane’s office leasing dynamics are among the most attractive in the nation.

As the cycle turns, the boutique property house has been linked to a series of office deals and late last year struck a deal to buy an Adelaide office block for $73m.

The Brisbane sale is being struck in the high $200m range, showing that quality buildings are continuing to attract capital, even as lower grade assets struggle.

The reset implied by the deal contrasts with the deep value falls in the US and shows that local cities with high office usage are more attuned to Asian markets.

Quintessential Equity’s last major purchase was 30 Pirie St in Adelaide, which it picked up for its Master Fund No. 3 from the Australian Unity Office Property Fund. That was a refurbishment and repositioning play but this Brisbane asset is one of the city’s best.

Brisbane last year saw a late run of sales with tycoons Gina Rinehart and Sam Chong buying buildings and international investment manager Savills Investment Management also forging into the capital.

Knight Frank’s Justin Bond, Ben Schubert and Neil Brookes and JLL’s Paul Noonan, Seb Turnbull and Kate Low are handling the latest sale but did not comment.

The 27-level A-grade building has 27,632sqm of net lettable area, made up of 24,922sqm of offices and 2710sqm of retail space, with 94 car bays. The property is on a 2127sqm site at the entrance to the Queen Street Mall and surrounded by Brisbane’s premier luxury retail precinct.

The bank has occupied the three levels of retail space in the building since it was built and its lease runs until September 2029. It has a weighted average lease expiry of 4.18 years and is about 93 per cent occupied by tenants including ASIC, architects Conrad Gargett, Multiplex, Hall Chadwick and Christie Spaces.

Brisbane CBD assets of this size rarely trade, which prompted a rush of buyers. The corner position has also spurred interest in the Golden Triangle building.