Castlereagh Street office suite listed for $695,000 as SMSF investors return to Sydney strata office

A 158-square-metre office suite in Museum Towers, a mixed-use 35 storey office and residential tower on Castlereagh Street in the CBD has been listed for sale with $695,000 expectations as demand for larger Sydney strata offices from self-managed super fund investors rises.

The office suite includes a car park at 267 Castlereagh Street with owners and tenants also having access to an indoor pool and a roof-top deck.

Museum Towers dates back to the 1930s with a decorative red-brick façade featuring four floors of office suites and 120 apartments.

According to Knight Frank, the Sydney CBD Strata office market recovered strongly in 2012 after bottoming out in 2011, with SMSF investors leading the charge.

The total volume of sales increased by 45% over this period with $136.5 million transacting despite only a modest rise of 3.1% in the total number of sales.

Capital values also showed a limited increase of 1.7% to a current total market average of $5,122 per square metre.

Knight Frank City Sales executive, Andrew Palmer says there has been a significant increase in the volume of sales experienced in Sydney CBD Strata Office sales, specifically among owner occupiers, across the last calendar year despite a tightening and slowdown in the delivery of new quality stock to the local market.

In particular, the core CBD precinct attracted strong interest with average capital values increasing by 15.6% on 2011 figures.

“Predominantly the key factors for driving this significant increase in sales in 2012 are improved investor sentiment and the cost of debt continuing to fall with the cash rate now at its lowest level over 50 years. In 2012, we entered into a perceived low point of the property cycle with interest rates dropping and confidence returning in the market,” says Palmer.

“This sharp spike in sales can also be attributed to the change which took place 18 months ago in SMSFs. Investors began taking advantage of favourable tax benefits on offer with much of this increased activity during 2012 generated by SMSF’s and this in turn has pushed prices steeply up in the core precinct.

“There has also been noticeable change in buyer interest from sub 100 square metre office spaces which accounted for almost three quarters of all sales in 2011 to a strong movement back to larger office spaces, 101 square metres plus.

"This is indicative of Australian business downsizing post GFC and business becoming more confident and beginning to expand again in 2012,” he says.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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