Maville Bay exits North Sydney as office pressures rise

Chinese-backed Maville Bay is joining a growing list of companies getting out of Australia.

Maville Bay has sold 116 Miller St and 173 Pacific Hwy in North Sydney

Chinese-backed Maville Bay has sold two adjacent commercial properties in North Sydney for close to $90m in a sign of the shifting values in the area.

The sale of 116 Miller Street and 173 Pacific Highway to another Asian group is the latest to reflect the fall-off in values in the key market, which is struggling to absorb space as a series of new towers are either getting built or are in planning.

Maville had bought the properties from property syndicator Property Bank Australia, Security Capital Corporation and RG Property for $133.8m in 2017 and had won approval for a 33- level building on part of the block directly opposite the Victoria Cross Metro station.

But it dropped its plans and instead struck a deal to exit, in a sign that suburban office markets remain tough and investors are still shying away from North Sydney.

The two properties – an office and retail investment – occupy a site totalling 2304sq m. The Miller Street block is an eight-storey A-grade office and retail building, with retail on the ground floor and seven levels of office space above. The refurbished property has 10,098sq m of net lettable area and is occupied by blue-chip tenants including ANZ Bank and Commonwealth Bank on short leases.

The Pacific Highway asset is a vacant four-storey office building that was previously occupied by long-term anchor tenant Australian Catholic University. It is now a development site, with approval for 10,000sq m of office space. Alternatively, it could be considered ripe for a build-to-rent scheme, with plans already drawn up.

Knight Frank is brokering the deal but declined to comment.

The agency had billed the property as a chance to acquire commercial assets with diversified income at 116 Miller Street and value-enhancement initiatives for both buildings, underpinned by the development potential.

The Miller Street block was 66.4 per cent leased and had a weighted lease expiry of 1.38 years by income. The estimated fully leased net income for 116 Miller Street is $9.35m, with strong rental growth history.

A build-to rent scheme was also prepared by architects Woods Bagot for 142 apartments and 12,090sq m of residential and retail area, subject to council approval.