As Australia’s third tightest prime office market with a vacancy rate of just 4.5 per cent, the South Sydney commercial market remains poised for rental growth, due to limited new supply and a strong population growth outlook between 2016 and 2026 of 2.2 per cent per annum.
For the first time in 15 years, Gateway, at 241 O’Riordan Street Mascot comes to the market, after an extensive $18m refurbishment in 2014 and a Weighted Average Lease Expiry (WALE) of 5.5 years and fully leased net income of $8.85 million.
With an expected price guide of $140 million the 19,199sqm A-grade commercial office building with 78sqm of ground floor retail, was completed in 1992 and comprises 10 upper levels of office accommodation, ground floor foyer, retail, 399 car parking spaces across two levels of basement parking, gymnasium and end-of-trip facilities.
For sale through James Barber, Adam Woodward and James Girvan of Colliers International in conjunction with Rob Sewell, Paul Noonan, Stuart McCann and LingWei Kong of JLL, the asset is fully leased to 12 tenants, including AAA rated NSW Government which occupies 44 per cent of the NLA; Abbvie, the 78th largest company in the world occupies 13 per cent of the NLA and a multinational corporate tenancy profile includes Deutsche Bank and Landis+Gyr, all offering a strong fixed rental growth via 3 per cent plus annual reviews.
Robert Sewell, Head of Office Investments JLL, noted “South Sydney’s strategic location to Sydney Airport and the well-connected rail network makes it a desirable location for a broad range of office occupiers and the area is expected to benefit greatly from the Sydney Metro, Australia’s largest public transport project. We expect interest from a number of local, national and offshore investors, looking for strong rental growth and return on investment in a tightly held market, within close proximity to the Sydney CBD”.
Just 7kms south of the Sydney CBD, the building offers prominent frontage to the main arterial roads of O’Riordan Street and Qantas Drive, with digital signage attracting a large audience with over 35,000 cars per day on Qantas Drive alone and immediate access to the Sydney Domestic and International Airports.
The 4.5-star Stamford Plaza Sydney Airport Hotel is located directly next door to Gateway and provides 315 guest rooms, 11 function rooms and a Ballroom providing capacity for up to 500 people. Other local amenities include a child care centre on Coward Street, an abundance of local cafes, restaurants and bars on Bourke Road and O’Riordan Street.
There is potential to explore long term change of use strategies such as Hotel (subject to Council approval) and an option to convert the level 11 plant room into additional office accommodation providing approximately 1,350sqm of NLA, DA approval already obtained.
Colliers International’s Project Leasing agent Rob Gishen who acted for the owner in the office leasing of the building, said that the nature of demand from diverse industry groups who see Mascot as a fantastic location has seen industries such as Government, Media, Finance, Travel, Pharmaceuticals and Energy commit to Gateway 241.
“All these tenants have committed to long term leases and selected the location for reasons of access, convenience, proximity to the CBD and the airport and quality of the refurbishment.
“241 has best in class end of trip facilities and given the strong desire for organisations to deliver a Wellness Strategy to current and future staff, these on-site facilities were viewed favourably”
In the past 12 months, demand for the precinct has been at an all-time high with over 109,000 square metres of enquiries received across several industry sectors.
100% interest in Gateway, 241 O’Riordan Street, Mascot is offered for sale by international Expressions of Interest (EOI), closing 4pm (AEDT) Tuesday 14th March 2017 through Colliers International and JLL.