Sale of Louisa Lawson Building for $225 million biggest ACT commercial property deal in 2015

Nine major commercial assets above $10 million were sold in the ACT in 2015, totalling $531,085,000.

The successful year came to a fitting end with the sale of the Louisa Lawson Building in Greenway finalised on Christmas Eve. Colliers International’s national director of capital markets and office leasing Tim Mutton negotiated the sale of the Tuggeranong office block, which sold to South Korean property investors FG Asset Management for $225 million.

Mr Mutton negotiated six of the nine major sales of the year, totalling $369,260,000. The sale of the Louisa Lawson Building reflects a market yield approaching 5.5 per cent, he says.

Given the suburban location of the building, it sets a new benchmarks for the Canberra market and government-leased buildings elsewhere in Australia. The result also reflect the global investor demand for new office buildings with high-quality lease covenant and tenure, he says.

“We expect this growth in investment will continue in 2016, however, there will be different types of investors in the market compared to the previous cycle,” Mr Mutton says.

“In 2007, the most dominant purchasers were Australian institutions with some smaller international groups. In the current cycle, these institutions are increasingly being funded by offshore groups who are looking to partner with them because of their expertise in Australian property.”

The remaining eight $10 million-plus sales were sold to one local vendor and seven Australian funds.

Mr Mutton says FG Asset Management was the first Korean commercial investor in Canberra and the first Asian buyer in the capital, since Singaporean investors CIMB bought 50 Marcus Clarke Street in 2012 and Frasers purchased the Caroline Chisholm Centre in 2012.

“Canberra has stood out as a recipient of global funds due to stability offered by buildings backed by long leases to the Commonwealth government,” Mr Mutton says.

“With the volatility we are seeing globally in equities and commodities markets, investors are attracted to the steady returns available on the big government buildings in Canberra.”

Highest commercial sales of 2015

• Louisa Lawson Building, Greenway – $225 million (Colliers)
• 134 Reed Street, Greenway – $75 million (CBRE)
• 255 London Circuit, City – $70.025 million (JLL)
• 60 Marcus Clarke Street, City – $49.1 million (Colliers)
• 44 Sydney Avenue, Barton – $32 million (Colliers)
• 33 Allara Street, City – $29 million (Colliers)
• 20 Allara Street, City – $20.5 million (Colliers)
• 64 Allara Street, City – $16.8 million (JLL)
• 54 Marcus Clarke Street, City – $14.2 million (Colliers)