In what sets a new benchmark for commercial asset sales in Wollongong, a 6,719m2 A-grade office building with a sub 5-year WALE has just sold for $33.3 million, reflecting a 7.25% nett yield and approx. $5,000/m2 of building area. The property, 77 Market Street, was sold by MMJ Commercial (Wollongong) on behalf of Medibank Private Limited.
“The building is only 9 years old having been originally constructed by GPT for Australian Health Management Group (AHM) as part of a deal to enable the recent Wollongong Central Shopping Centre development to proceed.” Says Michael Croghan, Director of Commercial Leasing at MMJ. “Medibank took advantage of strong sales conditions and capitalised on recent leasing deals within the building”.
The purchaser is Centuria Property Funds Limited, a large and well-regarded property fund, based in Sydney. Centuria are no strangers to Wollongong having previously owned a number of assets in the region. Despite being a ‘seller’s market’, they were buoyed by the opportunity to purchase a quality asset in a regional city that continues to transform. Wollongong also features low tightening A-grade office vacancy and an upward trend in rentals.
Apart from a record price, the sale represents a vote of confidence by Medibank in AHM’s Wollongong operations, noting that a key part of the sale was a long term lease-back.
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