The property giant has taken four St Georges Terrace properties off the market, including the Channel 9 headquarters, citing strong leasing conditions.
Centuria Capital Group has withdrawn a portfolio of four Perth office buildings from the market, including the Channel 9 headquarters, as buyers wait for conditions to ease.
The ASX-listed property fund listed 251, 253, 255 and 267 St Georges Terrace for sale in late September via an expressions of interest campaign.
The final three buildings are leased to the Nine Network on a 12-year term.
However the assets were withdrawn in recent weeks, as industry sources claimed the portfolio did not attract the desired asking price.
Property Council of Australia figures show Perth’s CBD office occupancy reached 80 per cent of pre-COVID levels in November, the highest in the country.
In addition, uncertain global economic conditions have led to a slowdown in capital transactions, industry experts say.
A Centuria spokesperson attributed the strong leasing market to withdrawing its four office assets from sale.
“In recent weeks, Centuria has experienced strong leasing tractions within the Perth office market,” the company told Business News.
“For this reason, the team has taken a view to retain 251, 253, 255 and 267 St Georges Terrace, to capitalise on this strong leasing momentum.”
Cushman & Wakefield director and head of leasing Roly Egerton-Warburton said Perth was experiencing the strongest leasing market in more than a decade, on the back of strong resources activity.
“It’s been the strongest market we have had in 11 years,” he said.
“Most A grade assets have seen net rent increases of 10 per cent over the past 12 months [and] incentives have decreased significantly in some assets.”
Mr Egerton-Warburton added that while buyers were being conservative in the current environment, the strong leasing conditions signalled a light at the end of the tunnel for the capital transactions market.
“The theme of capital markets is it has been difficult in the last six months with international geopolitical tensions and financial market instability,” he said.
“Changes in the world of finance have meant overseas and interstate money has been more conservative and risk averse.
“[But] because of very strong leasing activity we would expect the capital transaction market to rebound very quickly.”
Property Council of Australia WA Division director Sandra Brewer added that “ongoing instability in global markets and around interest rates is creating a bit of a pause in market activity”.
“We expect to see renewed enthusiasm in 2023,” she added.
“While we have seen some assets for sale withdraw from the market, we understand these decisions are driven by robust leasing demand and anticipated improvements in capital values in the short to medium term.”
Ms Brewer said the WA office market had proven to be resilient during COVID.
“New office stock due to come online in the new year is already heavily pre-committed, and occupancy levels are at a national high of 80 per cent,” she said.
A recent Property Council study showed the industry expected capital values to improve slightly in coming months across most capital cities.
JLL was appointed to sell Centuria’s four St Georges Terrace assets, comprising 13,700 square metres of office accommodation across a 5,633sqm landholding.
At the time it was marketed, the portfolio had a 3.21-year weighted average lease expiry and was 80 per cent leased.
Centuria merged with West Australian property fund Primewest last year and the companies rebranded under one banner this October.
Today, the company has close to $20 billion in assets under management.
The group bought Allendale Square at 77 St Georges Terrace from Mirvac for $223 million this year, on a 7.25 per cent capitalisation rate and 5.8-year WALE.
Centuria’s John Bond said the asset appealed due to Mirvac’s $62 million refurbishment of the asset and a strong leasing market.
