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Boutique real estate investment manager Marquette Properties has splashed out on another major office building in inner Brisbane with a $104.4 million deal for a Southbank tower developed by Mirvac Group (ASX: MGR).
Hard on the heels of the $420 million acquisition of the Blue Tower in the CBD’s ‘golden triangle’, bought in partnership with an Lendlease (ASX: LLC) fund earlier this year, Marquette’s off-market deal for 189 Grey Street gives the Brisbane-based fund a foothold in Brisbane’s most tightly held office precinct.
Mirvac offloaded the office building as part of the property giant’s $1.3 billion sell-off of non-core assets announced earlier this year.
The 12-storey A-grade Southbank office building was developed by Mirvac in 2005. It comprises 12,595sqm of net lettable area and carries vacancies across one-and-a-half floors, which negotiating agency CBRE says is expected to be filled shortly on a short-term lease.
Marquette founder and managing director Toby Lewis remains confident in the inner-city office market despite the widespread challenges facing the sector and he is forecasting a rebound in 2023.
“We remain cautious but acquisitive and feel that the significant volatility across markets augers well for commercial property,” Lewis says.
“We will keep our assumptions around interest rates and cap rates conservative but feel next year will be a big bounce back for our industry.”
Lewis sees the Southbank precinct among the most prized in the Brisbane office market.
“We’d argue that Grey Street is among the top three streets in Brisbane for office buildings, offering amenity which is among the best in our city,” he says. “By measure of office fundamentals, the (Grey Street) asset is one of the best buildings in Brisbane.”
The office deal was negotiated by CBRE’s Tom Phipps who is expecting a lift in activity from smaller investors for assets such as 189 Grey Street.
“With very little REIT, wholesale or offshore direct capital currently active we are seeing syndicators, club investors and privates taking advantage of the current market volatility to secure quality assets that larger institutions deem too small or non-core,” says Phipps.
“We had made several approaches to acquire 189 Grey Street on Marquette’s behalf and were ready to act when Mirvac elected to sell.”
The Grey Street building is one of only seven office buildings in Southbank. It is 60 per cent leased to Insurance Australia Group (ASX: IAG) and engineering services group Ausenco.
In January this year, Marquette Properties added the Blue Tower at 12 Creek Street to its earlier $285 million acquisition of the Gold Tower at 10 Eagle Street in the Brisbane CBD’s ‘golden triangle’. The group now has assets of about $1.3 billion under management.
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