Singaporeans to buy Sydney’s $300m ‘Workshop’ project

The Milligan Group project.
The Milligan Group project.

Singaporean group ARA Asset Management is looking to put its mark on Sydney’s commercial property market early this year with the purchase of a $300 million office project in the harbourfront suburb of Pyrmont.

The city fringe is running hot and has already attracted investment from US funds group AEW, internet giant Google and listed property group Dexus.

The precinct is now on ARA’s radar as it is targeting the purchase of a major development to be undertaken by the Milligan Group and its private partners.

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The deal, being brokered by Cushman & Wakefield, would see ARA pre-purchase the under-construction building that is to be occupied by French PR company Publicis.

The Pyrmont complex is also drawing more technology and business tenants as the Darling Harbour area is revamped and links improve from the city, with a metro station also in the offing.

For ARA, deploying into the area would give it a key holding as capitalisation rates continue to tighten on office buildings and a relative shortage of new stock emerges in Sydney.

ARA, which has more than 1300 staff in 21 cities in eight countries to manage its $40 billion property empire, runs a series of listed and unlisted trusts that invest locally.

The fund manager is stepping up its investment in Australia and last year snapped up a near 20% stake in the listed Cromwell Property Group for about $405 million. It already has a major presence in direct markets, including Melbourne’s $600 million Southgate complex.

The project hit the market last October, with developer Milligan and its partners Stamford Capital and Quintet hoping for more than $300 million.

A deal early in the year would demonstrate that international and local groups remain keen to pick up city-fringe buildings as the price of office assets continues to soar. A deal is likely to be struck at a yield of about 5%.

The sale of the office project under construction at 21 Harris St, known as Workshop, is being handled by Cushman & Wakefield’s Richard Butler, Mark Hansen, Steven Kearney and Brad Hamilton.

Workshop is intended to be a top-quality campus-style creative building and will consist of eight levels with a lettable area of 18,888sqm. The A-Grade complex, slated for completion in December, comprises seven office levels, with floor plates of up to 2650sqm, and retail areas including a gym, childcare and a cafe and bar.

Workshop has been designed by architects Bates Smart and is targeting a six-star Green Star and five-star NABERS rating.

The building is to have an eight-level atrium and the exterior will feature terracotta, glass and steel.

Pyrmont is firmly on the radar of major institutions and many are targeting repurposed buildings. Dexus snapped up 100 Harris St last year for $327.5 million and Google bought the Channel 7 building from Aqualand for $170 million last July.

The agents and parties declined to comment.

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