City fringe assets in hot demand

Investors are expected to pump more than $170 million into the city fringe sector through the sale of development sites and office towers.

One of the last remaining Bondi Junction development sites is up for sale, and is expected to fetch about $90 million to $100 million. This is the first time it has been offered to the market in 25 years.

Located at 235-239 Oxford Street, Bondi Junction, the mixed-use asset features a substantial site area of 1667 square metres on a prime retail corner position.

The property is for sale through Knight Frank's John Bowie Wilson, Tim Holtsbaum and Dominic Ong.

According to Knight Frank's head of commercial sales, NSW, John Bowie Wilson, he is anticipating a high level of interest from local and offshore developers given the high-profile, high foot-traffic location.

"This asset is ideal for a hotel and retail development," Mr Bowie Wilson said. "A lot of offices in the core precinct of Bondi Junction have been converted to higher and better-use residential, however there are no major hotels in the nearby area so it's a really unique proposition."

Knight Frank director, site sales NSW, Tim Holtsbaum said the site had a secure holding income with demolition clauses on all leases and zoning that permitted a range of uses including hotel, retail and commercial. It is surrounded by residential towers.

"Developers will seek to capitalise on the significant under-supply of hotel and commercial office accommodation in Sydney's eastern suburbs, as well as its location," Mr Holtsbaum??? said.

Across town at Parramatta, CorVal??? is selling 75 George Street, which could reap up to $80 million.

The freehold property is exclusively for sale through Graeme Russell, Simon Fenn, Ian Hetherington and Ben Azar of Savills Australia on behalf of CorVal and offers ground-floor retail, five office floors and 105 basement car spots.

Parramatta is in hot demand from the state and federal governments as well as the private sector with Walker Corporation, Charter Hall, Dexus and GPT all developing and/or investing in office projects there.

According to research from Savills Australia, the Parramatta office market continues to be the most exciting in Australia, as it transitions into "Sydney's second CBD". This is resulting in heightened tenant demand and substantial amounts of private and public sector investment.

Supportive of this, prime grade vacancy had fallen to zero and overall vacancy was the lowest of any major market at 4.3 per cent, said Savills Australia. Further, 133,000sq m of precommitments have been announced, with all of these tenants moving to Parramatta from the Sydney CBD.

According to Knight Frank agents, with prime office vacancy close to zero, strong demand has seen the largest annual increase of prime gross face rents in five years in Parramatta.

The overall vacancy rate as at July 2017 remained at an all-time low of 4.3 per cent, well below the 10-year average of 7.7 per cent. Parramatta's prime market recorded no available space, a figure which has remained static since January last year, making Parramatta the tightest prime office market in the country.

Knight Frank director, metropolitan sales, NSW, Wally Scales said the Parramatta office market was expected to remain tight.

"Leasing demand is patchy and activity continues to be constrained due to the acute shortage of available space. This is expected to continue until new supply, with uncommitted surplus space, starts to become available from 2019-20," Mr Scales said.

This story City fringe assets in hot demand first appeared on The Sydney Morning Herald.