Clarence Property seals $119m deal for Edward St tower in Brisbane CBD

The 120 Edward Street building in Brisbane has sold for $119m.

Clarence Property has finalised a $119m deal to buy 120 Edward Street in the heart of Brisbane’s central business district as the city locks in its status as one of the country’s busiest office markets.

The funds group will add the A-grade office tower that it bought from ­global real estate investment ­manager DWS to its flagship Clarence Property Diversified Fund, as part of a strategy to make counter cyclical ­acquisitions to boost its property portfolio.

The 15,161sq m block was developed in 2001, and in keeping with the resurgence of Brisbane’s leasing market, is 98 per cent leased.

The city has emerged as one of the country’s most active office markets but buildings are still trading at a ­discount to their boomtime values; 120 Edward Street last traded for $142.7m in 2017.

Clarence Property head of capital transactions Ben Somerville is ­optimistic about the year ahead, ­despite the headwinds impacting the property sector.

“We have certainly seen a softening of yields in the office market nationally, but the Brisbane CBD transaction provides a strategic holding in a market that continues to show remarkable strength,” Mr Somerville said.

Sales agents, CBRE Queensland senior managing director Bruce Baker, and Queensland state director, Peter Chapple, said Brisbane’s strong leasing market and rising activity in the Asia-Pacific supported the interest in the A-grade office block.

Clarence Property targets high-growth areas of southeast Queensland and northern NSW, and chief executive Simon Kennedy said Brisbane fit the bill.

“This acquisition represents a strategic counter-cyclical play in a market that we believe is well placed for the future,” Mr Kennedy said.

“The property has been acquired at well below replacement cost and the resilience we have seen in Brisbane in recent years positions it as one of the standout office markets nationally.”

Sales in the Queensland capital’s office market has been dominated by private buyers.

Fund managers are also active, including Warren Ebert’s Sentinel Property, which extended its run of office purchases to the RACQ headquarters, also on Edward Street, in a $70m deal.

Charter Hall and a Canadian backer earlier sold 309 North Quay to Taiwanese-backed developer Shayher for about $46m. The group also offloaded 343 Albert Street to a private player for about $55m, while ­Alceon bought 40 Tank Street from Charter Hall for $73m.

In other deals, the Australian Unity Office Fund sold a Brisbane office block that was facing vacancy issues for $64.5m. It is now expected to be converted for another use.