Brisbane towers at fresh heights as new deal-making hits $1bn

The Queensland capital may be entering a golden age of commercial investment as big owners pounce on buildings that come up for sale.

Marquette Properties is buying Blue Tower and The Annex for $420m.

Almost $1bn worth of Brisbane office towers are trading as the Queensland capital becomes a major focus for large investors.

The city has emerged almost unscathed from the coronavirus pandemic and rental growth is expected as tenants chase more space.

In one of the largest plays, the listed Dexus has sold 12 Creek Street, the Blue Tower complex, in Brisbane to funds manager Marquette Properties in a deal with a headline price of about $420m.

Dexus and it partners will receive a net $391m from the transaction and will plough the proceeds back into new projects in the city. The listed Dexus had co-owned the building with the unlisted Dexus Wholesale Property Fund.

Marquette’s purchase was backed by a Lendlease-run fund that took a 49 per cent stake in the partnership that bought the tower.

The Toby Lewis-run company raised the remaining capital for the purchase from syndicate investors, looking to capitalise on the success of its purchase of the city‘s Gold Tower at 10 Eagle Street.

Marquette told prospective investors it bought the landmark Brisbane building on a fully leased yield of 6.8 per cent.

The property at 12 Creek Street is a 32-level, 38,746sq m A-grade office building in Brisbane’s “Golden Triangle”. It includes The Annex, which comprises a new boutique office space with a rooftop terrace, which was completed last year. Key tenants are BDO Services, Moray & Agnew and AFSA.

The building was sold via Knight Frank’s Justin Bond and Paul Roberts and CBRE’s Bruce Baker and Flint Davidson.

Dexus chief investment officer Ross Du Vernet said the sale allowed the company to recycle capital into its high returning development pipeline, with the company‘s $2.1bn Waterfront Brisbane development expected to kick off shortly.

“We are excited about the opportunity to focus our leasing, asset management and development efforts on this new development project,” he said.

Meanwhile, Malaysian pension fund Kumpulan Wang Persaraan, known as KWAP, has sold 179 Turbot Street, a 26-floor landmark A-grade office building adjoining Suncorp Plaza, which it picked up in 2013.

The mandate was handled by office funds group Investa and another of its clients, Mercer Alternatives bought the office block for $150.9m.

The acquisition was made by Mercer on behalf of institutional clients invested in the $3bn Mercer Australia Property Fund.

That 24,904 sqm, A-grade office tower has views over the Roma Street Parklands and CBD skyline.

Mercer head of Pacific real estate Padraig Brown called out the opportunities in Brisbane.

“Following significant yield compression across Australia in recent years, we believe that the Brisbane office market currently provides an attractive yield premium, particularly for assets with value-add potential,” he said.

Investa fund manager, mandates, Kim Gregory, cited the spending in the city. “The macro tailwinds from significant government infrastructure investments, borders reopening, a strong economic outlook and the announcement of the 2032 Olympics, are expected to position the Brisbane office market for out-performance,” she said.

Knight Frank‘s Mr Bond and Ben Schubert brokered the sale.

The sales comes ahead of the full return to offices and confidence rises in the sector, with more vendors keen to sell.

The Green Square South Tower in Fortitude Valley has been listed for sale for about $210m. It was held for a South Korean group by AXA Investment Managers, with the move tipped to trigger significant local and offshore buyer interest.

CBRE’s Tom Phipps, Mr Baker and Peter Chapple and JLL’s Seb Turnbull and Paul Noonan will sell the landmark 505 St Pauls Terrace tower.

Constructed in 2007, Green Square South Tower is fully leased to Brisbane City Council and comprises 17,618sq m of modern office and retail space in a five-storey, campus style building.

Meanwhile, British funds manager M&G Real Estate is taking its A-grade HQ South Tower in Brisbane to market with a price guide of $140m-plus.

The building occupies a 3017sqm site and is well-connected to public transport and some of Fortitude Valley’s favourite destinations. The tower features easily divisible, 2250sqm in demand floor plates and top environmental credentials.

CPB Contractors, which is delivering Brisbane’s $6.9bn Cross River Rail project, is the major tenant, occupying 61 per cent of the 14,588sq m building.

Other office tenants include RPS Australia, AH Jackson & Co and the recently completed Next Medical Practice, complemented by a number of retailers across 1503sq m within a fully integrated retail plaza.

CBRE’s Mr Chapple, Mr Phipps and Stuart McCann and Knight Frank‘s Mr Bond, Mr Roberts and Mr Brookes are handling the sale.