Dexus puts Canberra’s Customs House up for sale

Canberra’s Finlay Crisp Centre is on the market.

Dexus Property Group is selling the home of Australia’s Customs Service in Canberra, with expectations the office precinct will fetch more than $85 million.

The Finlay Crisp Centre, which comprises three buildings – Customs House, Allara House and Nara Centre – occupies an entire city block and, with its government tenants, is expected to attract significant investor interest.

The property sits on an 8844sqm site with frontages to Constitution Ave, Allara St and London Circuit, less than 2km from the Canberra CBD.

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Customs House is the largest of three office buildings at 12 levels, while Allara House and Nara Centre are both six levels. The total net lettable area of all three buildings stands at almost 30,000sqm.

JLL’s head of sales and investments – ACT, Michael Heather and head of Office investments – Australia, Rob Sewell have been appointed to sell the property via an expressions of interest campaign, ending on September 8.

The weighted average lease expiry of just over three years provides an immediate secure income stream to AAA-rated tenants

Heather says the sale of the fully occupied buildings, which are leased to Commonwealth Government and ACT Government tenants until 2019 and 2020, comes at a time when Canberra is increasingly attractive to investors.

“Canberra is currently being assessed as a desirable investment destination by both national and international investors, and there are a number of very active buyers currently seeking core-plus office opportunities,” he says.

“The weighted average lease expiry of just over three years provides an immediate secure income stream to AAA-rated tenants while allowing flexibility to reposition the asset and to improve the income and tenancy profile.”

“The Finlay Crisp Centre was designed as a campus-style development that offers tenants outstanding surrounding amenity in the heart of the city, large efficient floor plates, generous car parking ratio and some brilliant views from the upper levels overlooking some of Canberra’s most notable attractions.”

Canberra is currently being assessed as a desirable investment destination by both national and international investors

According to JLL research, prime gross effective rents grew 2.5% in the second quarter of 2016, year on year.

Sewell says that with vacancy expected to continue dropping as other assets are removed from the market, the case for Canberra investment will be bolstered.

“There are a number of factors present in Canberra’s office market that will contribute to the attraction of this offering, including stock withdrawals up to 2018 and a limited supply outlook for the CBD, with the only major office project under construction in Canberra being at Tuggeranong,” he says.

“The attractive yield spreads between Canberra and Sydney and the asset’s location in the Civic precinct, which has the tightest prime grade vacancy rate of all monitored CBD office markets in Australia of 4.8% as of 2Q16, also strengthen its value proposition.”