Development sites valued at $510m to test market appetite
Investor appetite for development sites in the Sydney city and fringe areas will be tested in the rising interest rate environment with two separate projects, worth a combined $510 million, being offered to the market.
In the city is the 333 Kent Street office building, which has been rebranded Merchant House by the developers Addenbrooke in partnership with Super Ocean Group and Phoenix Property Investors.
It is a $400 million Sydney CBD office redevelopment that was previously part of Michael Gu’s collapsed iProsperity Group. Gu, who fled Australia in 2020 after his business operations went into administration, famously paid $88.88 million for the property in 2016 and had earmarked it as a demolition and rebuild project.
Merchant House at 333 Kent Street is a $400 million Sydney CBD office redevelopment being offered for sale.
JLL’s Luke Billiau, Paul Noonan and Simon Storry together with Knight Frank’s Paul Roberts, Jonathan Vaughan and Nell Brookes have been appointed to sell Merchant House which has been designed by WMK Architecture and Woods Bagot.
The building’s heritage facade will be kept as part of the 14,173 square metre development to create an A-grade office space across 16 floors.
“The building has been designed to meet the future tenant demands of the post-pandemic workplace,” Billiau said.
“Importantly, by utilising the existing building structure in the rebuild, there will be an estimated 60 per cent reduction in embodied carbon during construction and the building will be 130 per cent more energy efficient upon completion.”
Mr Roberts said Knight Frank sees a real undersupply of prime stock in the Western Corridor precinct, only 6 per cent of the future supply being delivered in this segment of the market.
“333 Kent Street will go partway to satisfying the demand in this market and will be keenly sought,” Roberts said.
At Redfern, on the city fringe, a $110 million development site is being sold through Knight Frank and Karbon Property on behalf of a private investor.
Known as The Regent Collection, the 3224 square metre site at 71-81a Regent Street and 10-38 Renwick Street sits across two titles and comprises 58 oversized residential apartments and four retail tenancies, as well as a neighbouring commercial building with dual street frontage.
The Regent Collection is a 3224 square metre site at 71-81a Regent Street and 10-38 Renwick Street in Redfern, Sydney.
Knight Frank’s Tim Holtsbaum said the site offered strong income as well as development upside, given it sits in what is seen as one Sydney’s major growth corridors, which includes South Eveleigh, Tech Central and the Waterloo metro precinct.
“The property provides a purchaser with the opportunity for immediate residential scale in Australia’s most sought-after city,” Holtsbaum said.
Under the sale offering there could be a strata sell down, the construction of the now-lapsed development approval, or a complete redevelopment of the site. It also comes with a mixed-use zoning which is likely to attract a range of developers and investors.
Karbon’s James McCourt said it is one of the few opportunities of scale in the city fringe that has potential to “truly leverage off a range of surrounding proposed planning changes”.
“The gentrification of Redfern is ongoing and underpinned by a commitment from all levels of government to develop Australia’s biggest technology and innovation precinct,” McCourt said.
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