Property fund manager Investa has teamed up with Canadian financial services group Manulife to acquire an upcoming tower on Martin Place, in a show of support for Sydney’s CBD worth $800 million.
While experts are debating whether traditional office buildings could become a thing of the past, Investa and Manulife have, through a 50/50 joint venture, splashed $800 million on the new 28-storey tower being developed by Macquarie Group.
The tower was initially due to be sold to super fund ISPT for some $1 billion, but the deal fell through at the onset of the pandemic.
To be located at 39 Martin Place, between Elizabeth and Castlereagh Street, the building will be situated in Sydney’s central business district and will incorporate 30,000 square metres of office space and 2,000 square metres of retail.
“The acquisition of 39 Martin Place is in line with the fund’s strategy, given the superior building quality, super prime location, leading sustainability and technology features. We also have the opportunity to add value through leasing,” said ICPF fund manager Brendan Looby.
On the leasing opportunity, Mr Looby said: “We have high confidence in the Sydney CBD office market and believe 39 Martin Place is well placed to attract a suite of high-quality users. We are pleased with the interest already shown by a number of prospective tenants attracted to the quality and premium location of 39 Martin Place, which will be loaded with amenity.”
Addressing the pandemic’s impact on office buildings, Kenny Lam, head of Asia Real Estate Investments for Manulife, said long-term macro and demographic prospects are expected to continue to support growth in the Asia Pacific region.
“39 Martin Place will be a top-grade office building in Sydney, equipped with one of the highest levels of technology and situated in a prime CBD locale giving unparalleled access to a wide variety of public transport and facilities,” Mr Lam said.
“Despite some of the headwinds resulting from the pandemic, we are continuing to focus our expansion efforts on the Asia Pacific region and high-quality assets, which are supported by strong long-term macro and demographic prospects.”
In a recent report, JP Morgan Asset Management (JMPAM) forecasted a bounceback for both retail and office property.
“Some are calling for the pandemic-induced demise of the office sector. We are more optimistic.
“Working from home has accelerated under COVID-19 and proven its technological feasibility. But an optimal, sustainable home/office balance depends on economics and human nature – and may vary across businesses and regions,” JPMAM found.
JPMAM opined that “viable investment opportunities” will hinge on “employers’ needs to attract the most productive workers to performance-enhancing, collaborative spaces in dynamic locations”.
39 Martin Place is scheduled to reach practical completion in 2024.