- Previously two vacant floors, two education tenants have signed on for five-by-five year leases
- Asset is owned by the Masters Builders Association
- Average rents have gone up for both A-grade and B-grade assets
As Sydney’s commercial fringe continues to gain interest, more stronger leasing deals have been secured.
A prime 1,550 sqm office space, previously two vacant floors, has been leased by education tenants.
The 54 Parramatta Road, Forrest Lodge space has been leased to two new education tenants on five-by-five-year leases, with the deals secured Justin Rosenberg of Colliers.The spaces already have built-in educational fit outs, allowing for a quick transaction.
For both tenants, this was their first location within the fringe market, previously having facilities outside of the CBD.
The gross rent achieved was 17% above what was previously marketed at, with leases being signed within three months of the new owner taking over the asset.
“With the market still bouncing back from COVID and occupiers navigating through new office/work from home strategies, it’s a really significant deal that shows how popular the city fringe has become with a range of industries interested,” Mr Rosenberg said.
“The fringe has continued to benefit from increased enquiry in technology, education, creative and media sectors, largely due to the point of difference their suburbs bring compared to the regular CBD and North Sydney markets.”
Selling agents James Cowan and Vince Kernahan sold the asset to the Master Builders Association (MBA) for $20.5 million. Nathanial Barbagallo and Elissa Dunlop of Colliers were immediately engaged to conduct an outgoing and facilities management audit. This has resulted in cost savings and improvements to return for the owner.
“This is a sensational city fringe asset expected to benefit from government infrastructure upgrades in close proximity, and we are very pleased to have unlocked the entrapped value via a collaborative effort between Colliers’ sales agents, leasing agents and real estate management,” said Mr Cowan.
“This effort has ensured genuine, and valuable, uptick in value in a very short period of time.”
Colliers research shows both A and B grade average net face rents remained stable during the first quarter of 2022.
Over the last 12 months, however, A-grade assets saw an uplift in average net rents of 3.4%, with low vacancy in key fringe areas. Increased demand has also given owners the confidence to rebase asking rents.
Enquiries for office space in the CBD Fringe increased during the first quarter of this year in comparison to Q1 2021. Spaces that were in the 300-400 sqm received the largest number of enquiries.