Mirvac seeking $250m for Perth office tower

Supplied Editorial Mirvac has put Allendale Square up for sale for about $250m

Mirvac has put Allendale Square in Perth up for sale for about $250m.

Office investors are emerging from the crisis with billions of dollars worth of towers to pick over as major landlords kick off their annual sales season and look to fund new projects.

Dexus is selling more than $1.7bn worth of property in Sydney and Brisbane as it looks to back premium towers, including the development of the Atlassian headquarters in Sydney.

Investa is also chasing a partner on the top parts of its $2.2bn office fund, as it also looks to develop new complexes, including build-to-rent towers.

Scentre, owner of the local Westfield empire, is also turning to office towers and just got the green light for a 47-storey office tower above Westfield Parramatta from the NSW government.

The project will have an additional 22 storeys on the original proposal, and it will become the area’s third tallest office tower once the developer finds an anchor tenant.

Now Mirvac is kicking off the next big office tower sale with the offer of Allendale Square in Perth for about $250m. It is looking to free up capital for its own developments, which include new residential sites and offices.

The resources-backed capital city has emerged as one of the safest markets in Australia, with no impact from the coronavirus crisis and mining companies in expansion mode.

Allendale Square is being pitched as a building that can be repositioned and upgraded in future while also spinning off a healthy income.

Mirvac chief investment officer Brett Draffen said the company continually assessed its office portfolio, given the market conditions, and had decided to sell Allendale Square.

“While Mirvac remains committed to investing in dynamic cities and urban areas with scale and deep employment markets, given the investor demand for well-located CBD office assets that will have exposure to the positive cycle in the WA mining and minerals industries, we feel it is an opportune time to divest Allendale Square,” he said.

Mirvac completed a redevelopment of the asset in 2017 which included updating the streetscape entries and the underground food court area. The asset has about 25,800sq m of office space, 3200sq m of retail space and 84 car spaces.

Cushman & Wakefield’s Josh Cullen and Mark Hansen, Nick Rathgeber and Leigh Melbourne and Colliers International’s Adam Woodward, James Barber and James Mitchell are handling the sale.

They said Perth was emerging as an office investment destination of choice as there was a large spread on returns against equivalent prime assets in Sydney and Perth. This is at historically high levels of about 170 basis points compared to the 30-year average of just below 100 basis points.

Recent deals include a 25 per cent interest in the Chevron headquarters sold to Singapore wealth fund GIC, Primewest and BlackRock’s purchase of 140 St Georges Terrace. Dexus also bought a 49 per cent stake in the new Woodside headquarters.