LaSalle snaps up North Sydney office space in $170m deal

The US investor is joining big groups that are backing the recovery of towers as leasing improves.

88 Walker St by Billbergia Billbergia Group, 88 Walker St, North Sydney Photographer Billbergia Group

LaSalle Investment Management has signalled its confidence in the office market recovering by swooping on the floors in a super-slim North Sydney building in a deal worth about $170m.

The US firm has snapped up the top 24 floors in an under-construction tower at 88 Walker Street which the private Billbergia is developing.

Some are committed to tenants but the deal comes as the developer is still filling up space and shows that big investors are willing to bet that companies will pour back into top buildings.

North Sydney has seen a surge in development plans with about ten new office towers proposed, with big players ranging from Lendlease, Stockland, Pro-Invest and Third.i, among those getting set. They are hoping to accommodate a wave of tenants expected to shift in as a new metro station opens and workers get back to their desks.

The 49-storey Billbergia-developed tower is a mixed use project which will cantilever over the existing Firehouse Hotel and incorporate the heritage pub into its facade. The 11,700sq m commercial space component will commence from level 25.

It is slated to be finished next year and also includes a 21-storey, 252-suite four-star hotel to be operated by Citadines on the lower levels, with public spaces also in the lower rise.

Singapore-based serviced apartment company The Ascott Limited and Middle East sovereign wealth fund the Qatar Investment Authority in 2019 bought the hotel component for $202m in 2019.

LaSalle is keen on the area and last year bought 201 Miller St in North Sydney, picking it up from the Dexus Office Partnership for about $152.4m. The office tower is well positioned to benefit from the surge of investment into the area.

The Billbergia projects will be finishing when many of rival projects are still at the planning stage or yet to really get underway. This will give it an advantage before the new stock hits the market, with tenants also expected to be drawn to the rare model of working above a hotel, which is common in Asia, but less so in Australia.

Those that are getting underway say they getting strong demand for their projects. One of the newest is a Third.i project, called Warada on Walker. It is a $650m project in joint venture with Toohey Miller. It has 22-levels of office and co-working spaces and says is being swarmed by interest from firms looking to secure its space for the return to office wave post pandemic.

A Colliers report found after a record amount of new supply last year there was a hiatus in North Sydney‘s market, with only two projects slated next year.

The only other significant committed development is Lendlease’s Victoria Cross development slated for 2025.