Gold Coast property market: Office building sales leave seller in the red

Office vacancy levels on the Gold Coast are running at record lows but that’s little consolation to the owners of three Southport buildings.

Office vacancy levels on the Gold Coast might be running at record lows but that’s little consolation to the owners of three Southport buildings.

They have cashed in their holdings but walked away poorer for their landlord experiences.

One of them might have been relying on the presence of a big four bank in his building as some sort of investment safety net.

Not so! When the fellow decided to ‘withdraw’ his investment by selling up, his capital outlay had gone into debit by virtually $3 million.

He could perhaps consider himself lucky – another Southport seller has ended up more than $4 million in the red.

A new survey shows that nationally, capital values of office properties have dropped by 9 per cent over the past 12 months.

That doesn’t mean the Gold Coast is lumped in that basket.

NAB’s Southport base at 27 Scarborough St

The city is not loaded with major A-grade office blocks and sales of those that it does have are infrequent.

The Southport office market, in which vacancy levels are 6.6 per cent, is dominated by small or medium-size office properties.

Yields, because of a jump in interest rates, are falling and other factors impacting the re-sale market are buyers preferring newer ‘green’ buildings with solid tenants on leases that have years to run.

There can be background factors, such as changed circumstances, that decide landlords to sell and reluctantly swallow losses.

The three losing buildings sold in Southport in the past three months are not A-grade, even if in one property the tenants could be in that category.

That property is a two-level bank one in Scarborough St that has a large green tree at its front door.

That’s not a money tree, as Brisbane investor Paul Baynes has discovered.

He bought the property, in which NAB and listed company APM are the key tenants, for $10.54 million in 2008.

The property has sold to Joe Gorski, founder of office-supplies business BBC, for $7.6 million.

Joe, who owns neighbouring office building Kaybank Plaza, is collecting a net $598,000 a year in rent, or a 7.7 per cent yield on his investment.

He and other investors who lined up for the property would have realised that blue-chip NAB has fewer than three years left on its lease.

That means, given the propensity for banks to shut branches, that it might not be chasing a new lease and the NAB rent well could dry up.

The KRG Centre, a four-level block in Bay St and which was built more than 40 years ago, has been a bad experience for an entity controlled by Buderim residents Garth and Jennifer Davidson.

It was bought for $12 million in 2016 and has sold, fully leased and netting $730,000 a year, to a Chinese investor for $7.75 million.

The ‘pain’ is nowhere near as bad when it comes to the 21-year-old former home of failed funds manager MFS in Hicks St.

It was sold to company Soph, owned by the late Harley Hooper, in 2006 at $6.525 million and later underwent a major upgrade.

A Brisbane investor has secured it for $125,000 less, along with a net return on the fully-leased building of $484,000.

SPLITTING TITLE

Wanda Wu, the Sydney investor who in 2018 paid $30.5 million for former timeshare resort Tiki Village in Surfers Paradise, is out to legally give the site the splits.

He’s moving to put the 2100 sqm riverfront part of the near 5000 sqm parcel on a separate title, a portion which he tried to sell two years ago as a development site.

Tiki Village, which is more than 40 years old, today operates as a hotel, while a riverfront building has been home to Casablanca, a venue which riled the city council three months ago when it argued it was not trading as an approved hotel but as a nightclub.

TRY, TRY, TRY AGAIN

Hope Island

Arthur Lowe, a developer who’s entered his 93rd year, is paying testament to the old saying that ‘if you at first you don’t succeed, try, try, try again’.

The Hope Island resident, who has one-time ownership of the Horizon Shores marina on his resume, has made several attempts since 2021 to sell the Cav’s Steakhouse site at Labrador, bought for $7.5 million in 2019.

He at one point was chasing $8 million, booted his quest to offers above $11.2 million by September, and today is asking would-be buyers to put up their hands.

The Frank St holding has approval for a 13-floor tower with retail at its base.

LAKE ORR SALE

Professor Raoul Mortley

Raoul Mortley, former Bond University vice-chancellor, has embarked on a fresh attempt to sell an apartment site fronting Robina’s Lake Orr that first was marketed nearly 20 years ago.

The 79-year-old professor bought the near 5000 sqm parcel from Bond Uni for $695,000 in 2000 and he and wife Miranda built a home on it before angling to use the land for student units.

It’s approved for Lake Terraces Residences, a three-floor project with 49 two and three-bedroom apartments and three basements of parking.

Originally published as Gold Coast property market: Office building sales leave seller in the red