QBE to anchor $300m tower in Parramatta

QBE to anchor $300m tower in Parramatta

17 August 2018

GPT Group has signed a heads of agreement with the insurer QBE to be the anchor tenant for its new $300 million office tower at Parramatta, the country’s fastest growing CBD, reports The Sydney Morning Herald.

The proposed lease will see QBE commit to 13,600 square metres or 51 per cent of 32 Smith Street, paving the way for construction to commence on the tower which has an end value of more than $300 million.

GPT’s head of office and logistics Matthew Faddy said demolition works have already commenced on the site with completion for the development targeted by late 2020.

”We are delighted to be close to signing a pre-commitment tenant for 32 Smith, which will pave the way for construction to get underway on what will be one of Parramatta’s iconic landmarks,” Mr Faddy said.

”This project will add further momentum to the transformation of Parramatta into a world class business and cultural district.”

Mr Faddy said the Parramatta office market would continue to benefit from the significant population growth and record infrastructure investment in Western Sydney.

”Parramatta, which has one of the lowest vacancy rates for any office market in Australia, is expected to see continued strong demand for quality office space from a diverse range of tenants,” Mr Faddy said.

According to the latest Property Council of Australia’s Office Market Report, for the six months to July, Parramatta’s vacancy rose from 3 per to 3.2 per cent, based on new supply.

The 26,000 square metre tower will feature a ground-level ‘urban room’ event space, an elevated podium terrace facing the Parramatta river, and a car park that can be converted into office space in the future.

GPT is also pushing hard to acquire an existing $275 million tower in Parramatta, says the AFR.

The twin moves from GPT in Parramatta underscore the fund manager’s confidence in the area’s growing effort to establish itself as Sydney’s second CBD as the metropolis reframes itself around the demands of long-term growth.

At a recent event, Property NSW flagged that more government departments were headed west — a move that will suit developers including Lang Walker, Dexus, Charter Hall and even shopping centre giant the Scentre Group, The Australian reports.

The Berejiklian government’s plans for new light rail, metro rail and motorway connections into Parramatta are tipped to provide another incentive for businesses to shift to the area.

Mr Faddy said the Parramatta office market would continue to benefit from the significant population growth and record infrastructure investment in western Sydney. “Parramatta, which has one of the lowest vacancy rates for any office market in Australia, is expected to see continued strong demand for quality office space from a diverse range of tenants,” he said.

GPT recently revealed that revaluations across its office, retail and logistics portfolios has added $457 million to its book value.

The revaluations equate to a 3.7 per cent gain on the developer’s book value from six months ago.

GPT announces its half year results on Monday, August 13. Its office portfolio delivered 5.5 per cent like-for-like income growth while its logistics portfolio returned a 3.6 per cent rise, notes the AFR.

Shaw and Partners analyst Peter Zuk said key positives in the result included the strong income growth “highlighting GPT’s leverage to the Sydney and Melbourne office markets” along with the specialty sales growth in retail and its conservative gearing.