A prominent transaction in the commercial property sector in Queensland recently unfolded as Deutsche Asset & Wealth Management, an international funds house, finalized the sale of a premium office tower in Brisbane’s CBD to local property fund manager, Clarence Property. The deal saw the office tower at 120 Edward Street change ownership for $119 million, marking a substantial decrease from the nearly $143 million it was acquired for seven years ago.

Despite the sale reflecting a significant loss of approximately $24 million, or a discount ranging between 20% and 25% from its peak value, Clarence Property’s acquisition of this 18-storey office building signifies a strategic move in the market. The purchase below the replacement cost underscores the confidence in the Brisbane CBD’s future prospects, with Clarence Property’s chief executive, Simon Kennedy, emphasizing the property’s strategic value and positioning within the evolving market landscape.

Clarence Property’s foray into this acquisition aligns with a broader trend of private investors making calculated investments in the Brisbane commercial real estate market, leveraging the city’s relatively healthier vacancy rates compared to other major Australian capitals. The Brisbane CBD’s vacancy rate of 9.5% in July stands notably lower than the national average of 13.6%, indicating a degree of resilience in the local market despite the prevailing economic challenges.

This transaction comes amidst a series of notable property acquisitions in Brisbane and the Gold Coast, where investors are capitalizing on the opportunity to secure properties at reduced prices and higher yields. The recent sale of 240 Queen Street for $250 million to Quintessential at a 17% discount, along with other significant transactions such as Exceed Capital’s acquisition in Toowong and Gina Rinehart’s investment in 175 Eagle Street, exemplify the active commercial real estate landscape in the region.

The successful sale of the 18-storey office tower at 120 Edward Street by DWS, following an extensive marketing campaign managed by CBRE, underscores the resilience and adaptability of the commercial property market in Queensland. The repositioning of the property through lease agreements and strategic enhancements led to a favorable outcome, culminating in Clarence Property’s entry into this prime asset through its flagship diversified fund.

Overall, the sale of the Brisbane CBD office tower, despite the loss incurred by the seller, sheds light on the evolving dynamics of the commercial property sector in Queensland. Clarence Property’s acquisition not only signifies a strategic investment decision but also underscores the enduring appeal and potential of the Brisbane market for astute investors seeking value and growth opportunities in the region.