Private investor Peter Harburg is selling the State Law Building in Brisbane, colloquially referred to as “Gotham City”, and could achieve as much as $140 million.
While 55 office buildings totalling more than $5.3 billion have traded in the Brisbane CBD in the past five years, there is now a shortage of government-leased office towers available for sale.
The 25-storey office tower, which is leased to the government until 2020, was purchased by Harburg Investments in 2008 for $91 million from Investa Properties.
The asset, at 25,500 square metres, is the largest of Mr Harburg’s three main assets in the city which include the IBM building and Westpac’s Brisbane headquarters. Harburg Investments has appointed CBRE’s Bill Tucker, Bruce Baker and Flint Davidson to sell the tower.
Mr Tucker said the asset was of a style that was generating the strongest interest in the market.
“The tower provides outstanding investment opportunities given its location, its tenant quality, its 6.6 year weighted average lease expiry and its potential to significantly increase cash flow over the medium to long term,” Mr Tucker said.
He said the building is rented at a rate below market levels.
“This is very unusual in the Brisbane CBD – a market in which most buildings are now over-rented due to the timing of recent supply and demand cycles.” Despite the record high vacancy rate in Brisbane, the building at 50 Ann Street gives its investor the ability to wade through a difficult period in leasing markets.
In 1995, it was the first major Brisbane CBD building to be completely refurbished. It had a facade replacement and roof treatment, which resulted in the building gaining its nickname, “Gotham City”. The building was again upgraded in 2007 when the current lease to the Queensland government began.
The only other asset on the market in Brisbane with a long government lease is the CP3 office tower. Owned by Lend Lease’s Australian Prime Property Fund Commercial and joint venture partner the Abu Dhabi Investment Authority, it has already drawn strong demand from offshore investors.