$72 million sale of KPMG’s city base tops list of property sales in December
VIV Padman’s $72 million acquisition of the KPMG building on Pirie St capped off a late surge in the Adelaide office market in 2014.
VIV Padman’s acquisition of the KPMG building on Pirie St capped off a late surge in the Adelaide office market in 2014.
The founder of Padman Health Care - which was taken over by Estia Health last year - paid $72 million for the building, representing a yield of 7.1 per cent.
The deal was brokered by CBRE and headlined a bumper list of sales in December.
A total of 26 transactions were reported in the final month of the year, accruing $138.8 million and up from November’s $29 million worth of sales across 15 deals.
CBRE Adelaide managing director Alistair Laycock said the sale of 151 Pirie St generated significant national and offshore buyer interest.
“Opportunities to purchase new generation office assets in Adelaide, constructed post 2006, have been very limited and as a result there was a high level of interest from both private and institutional investors,” he said.
CBRE negotiated the top four sales in December, including two large format retail stores at Hectorville.
A 2800sqm Freedom outlet sold for $8.6 million while the nearby Good Guys store attracted a $7.6 million price tag.
In the hotel sector, listed property fund Hotel Property Investments offloaded the Western Tavern at Mount Gambier for $6.35 million.
A Melbourne-based investor snapped up the hotel, which comprises 33 gaming machines, bistro dining, sports bar and drive through bottle shop, and offers a long-term lease to Wesfarmers subsidiary Liquorland.
CBRE Hotels’ Joseph Du Rieu, who brokered the deal, said the sale reflected the strong buyer demand for hotels leased to major national operators such as Liquorland and Australian Leisure and Hospitality Group (ALH).
“We received six offers for the property - the campaign attracted interest from across the nation, with inquiries from investors in most capital cities, together with locals in Mount Gambier,” he said.
December represented the second strongest month of sales in 2014, behind October’s $220.9 million haul which was boosted by Lend Lease’s $175.2 million acquisition of the SachsenFonds portfolio.
All sectors of the market generated stronger month-on-month sales results in December, but the leasing market remained subdued.
A total of 27 leases were finalised across 14,163sqm, slightly higher than Novembers’s 27 deals across 12,196sqm.
JLL’s latest office sector figures - released last week - offered more worrying signs for Adelaide’s CBD market, with the vacancy rate rising to 15 per cent in the last quarter of 2014.
However’ JLL head of office leasing Tom Budarick said 2014 ended with a series of deals being finalised.
“Several large tenants relocated from the suburbs into the CBD, which reflects the continuing trend of tenants seeking to upgrade their accommodation and take advantage of high incentives on offer, particularly in the CBD,” he said.
“Inquiry for office space was subdued throughout the year, with total inquiry for 2014 well below the level of inquiry recorded in recent years.”
“As a result landlords are competing vigorously for tenants by upgrading their accommodation and offering creative incentive packages.”