Deals roll in for major offices despite coronavirus storm

The office towers at the Lend Lease-developed Barangaroo South precinct
The office towers at the Lend Lease-developed Barangaroo South precinct

The country’s premiere office towers are weathering the coronavirus crisis storm with sales being struck at levels showing only slight shifts in values ahead of the pandemic hitting.

About a dozen major commercial property deals either collapsed or went into hibernation when the crisis struck in March, but behind the scenes talks could see some of the country’s best buildings change hands.

In one of the latest plays, Darren Steinberg-led property group Dexus is selling a major tower in Sydney’s Clarence St for about $530 million to an Asian investor.

Market players suggested that investor and developer Zone Q was in the frame to buy the building.

While the deal is yet to be finalised it will show a yield or market capitalisation rate of around 5%, in line with where it has been held by Dexus and showing that investors will pay up for top-quality buildings.

The building at 45 Clarence St is a landmark in the western corridor of Sydney’s financial district adjacent to Barangaroo, The 28 level A-grade tower has floor plates of 1250sqm and had a book value of $507 million in June 2019.

The major tenant is Qube Holdings and it was held on a market cap rate of 5.13% and an initial yield of 4.75%. It had a weighted lease term by income of 3.3 years.

The expected pain in the office sector is far more likely to be evident in lower grade buildings that struggle for tenants during tough times and might not be able to be upgraded to deal with the coronavirus.

Dexus has declined to comment on the transaction but the deal will be a shot in the arm for the best office buildings.

Dealmaking is also getting under way for Victorian office buildings, with Singaporean sovereign wealth fund GIC in talks to buy a Melbourne CBD tower from LaSalle Investment Management for more than $350 million.

LaSalle had paid an AMP Capital-run fund $231 million for the 30-level office building at 222 Exhibition St in 2015.

The tower, which sits near Lonsdale and Bourke streets in the heart of the city, was built in 1988 and has a wide range of ­tenants.

This article originally appeared on