Shayher Group circles Sydney CBD gem as offices comes back in vogue

Sydney Skyline

Shayher Group has emerged at the head of the field to buy an A-grade block in the Sydney central business district for about $200m. Picture: Richard Dobson

Developer Shayher Group has emerged at the head of the field to buy an A-grade block in the Sydney central business district for about $200m as capital pours back into city offices.

The company is targeting the purchase of 10 Barrack St, offered by US group AEW Capital Management, which will reap a substantial premium for the building.

The vendor repositioned the block after picking it up for about $138m in 2017 from China’s Bright Ruby and is benefiting from strong investor sentiment to top-class offices.

The impending sale shows the pick-up in sentiment towards Sydney CBD even as occupancy rates lag, although governments and companies are mandating a return to offices.

The parties and agents Cushman & Wakefield and CBRE declined to comment.

But big investors are betting there will be an even more profound shift back to cities in coming years and space will tighten, particularly for high-quality buildings that can provide healthy environments to lure back staff.

The building sits on a prominent position on the corner of Barrack and York streets, providing good transport access. The property, formerly United Airlines House, is a 12-storey office building completed in 1987 that has been extensively renovated.

The ground floor to level three were externally refurbished in February, and overall it comprises basement, ground, mezzanine and 12 floors of office space.

The 9540sq m B-grade building’s tenants include Batch Espresso, BTS Spark, EML, Itron Australasia, Kent Institute Australia, Manhattan Associates, National Breast Cancer Foundation, Pigott Stinson Lawyers, ProForce and Relationships Australia.

AEW has been selling assets after approaches from buyers betting on a rise in office values. The listed Elanor Investors is circling a Pyrmont office building at 19 Harris Street being sold by AEW in a deal worth about $180m.

The buyers are also experienced and see good opportunities in the market.

Shayher is one of the most active commercial and residential property purchasers in Queensland, and its haul includes Brisbane’s landmark Q&A Centre, which it picked up for about $395m in 2019.

The developer also undertook the city’s $1bn Brisbane Quarter project, which has been short-listed by Brisbane City Council. Shayher also has the rights to redevelop another strategic holding in the city, the Bulimba Barracks site.

It has been buying up new sites including in Sydney, where it bought a twin-building office complex in the inner western suburb of Ashfield for about $63m.