The Pittsway Arcade at 303 Pitt Street, Sydney recently sold for $43 million to The City of Sydney, bringing it one step closer to the vision for a landmark re-development bound by George, Park and Pitt Streets.
The on-market transaction, brokered by Knight Frank’s Jonathan Vaughan, John Bowie Wilson and Dominic Ong on behalf of a local private vendor, was sold via Expressions of Interest.
Located in the heart of the Sydney CBD’s commercial, retail and residential hubs with a strategic 19 metre retail street frontage to Pitt Street, the 727 sqm Pittsway Arcade has unrivalled access to public transport, direct access to Town Hall Station and the future George Street Light Rail project.
Offered for the first time in over 30 years, the eight-storey, freestanding building had 3,410.9 sqm of net lettable area (NLA) across both retail and commercial office space, with a weighted average lease expiry of 3.13 years. The property is almost 100% occupied and provides a diversified income stream, deriving 44% of its gross passing income from retail tenants. Sold with a net passing income of $1,694,452, the sale price reflected an initial yield of 3.90% which equates to $12,607/mÇ on NLA.
Knight Frank positioned the International Expressions of Interest campaign to highlight the property’s broad range of short, medium and long term value add opportunities, including redevelopment potential.
Mr Vaughan highlighted the beneficial market conditions for the sale of The Pittsway Arcade:
“The broad range local and offshore interest we received during the campaign reflected the distinct lack of stock on the market and the fact that the opportunity to purchase freehold, non-heritage listed buildings at this price point and in this location is extremely rare.
Despite the fact that the property was ultimately purchased by the adjoining owner, the market viewed the asset as an excellent long-term development site; probably the best of its kind in the Sydney CBD, due to its premium location within the CBD’s growth corridor, which will provide an opportunity to capitalise on major infrastructure projects into the future.”
According to Mr Bowie Wilson, Sydney is outperforming. The government’s sizeable capital injection into major infrastructure is fueling the Sydney CBD development market.
“The Sydney office market is going through a once in- a-generation revival. Sydney CBD has the lowest vacancy rate of Australia’s major cities at 6.2%. We are also witnessing the highest level of stock withdrawal in over 18 years, with circa 239,057 sqm taken offline in the 12 months to July 2016. As a result, the Sydney CBD is experiencing some of the strongest effective rental growth ever seen.”
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