Aviation House in Woden attracts offshore investor interest

International investors could shell out more than $70 million for Woden’s Aviation House, which will hit the market on Thursday.

The sale of the nine-storey building in Furzer Street is expected to be one of Canberra’s most significant commercial property transactions of the year.

JLL and Colliers International have listed the property, which is leased by the Civil Aviation Safety Authority and other public service agencies, on behalf of the Mirvac Group.

Colliers International’s national director of capital markets and office leasing Tim Mutton said the building was for sale via international expressions of interest and expected to fetch about $70 to $75 million.

Mr Mutton said offshore buyers had Canberra on their radar and the December sale of Greenway’s Louisa Lawson Building for $225 million to Korean investors had piqued their interest.

He will fly to Singapore this week to meet with potential buyers of Aviation House.

Asian investors will be able to fly directly between Singapore and Canberra from September, when Singapore Airlines begins international services four times each week.

The sale comes at a transitory time for Woden, following the move of 700 federal public servants out of the town centre in January.

The ACT government has since announced more than 1000 Access Canberra and administrative health staff will be moved to the town centre over the coming months.

JLL ACT’s head of sales and investments Michael Heather said government investment in Woden was “absolutely vital” for the success of the commercial centre.

“The incoming purchaser will benefit from the recent commitment by the ACT government to move 1100 public servants to nearby buildings in 2016, which will revitalise the town centre economy and absorb approximately 15,000 square metres of vacant office accommodation,” Mr Heather said.

“The Woden office market requires some clarification with minimal A-grade office vacancy in the precinct and the significant ACT government expenditure in the Furzer Street precinct helping to regenerate and renew Canberra’s first satellite town centre.”

He said the introduction of direct flights to Singapore from Canberra Airport would increase international demand for commercial property in the capital.

“The flexibility of Asian groups to come to Canberra for inspections and also connecting Canberra to the Asian market is definitely going to have a positive impact,” Mr Heather said.

“We know already that the capital is flowing from Asia into Australia and it’s only going to increase in coming years.”

In addition to accessibility, Mr Mutton said international flights will also help cement Canberra as a global city.

Built in 2007, Aviation House comprises 14,812 square metres of office accommodation across nine levels.

Mr Heather said the property was expected to attract superannuation funds and real estate investment trusts from both Australian and international groups.

“Demand is expected to be strong from both domestic and offshore groups due to the scarcity of available A-grade stock in the liquid price bracket of $50 to $100 million nationally,” Mr Heather said.

“The property appeals to Commonwealth of Australia tenants due to the large and functional floor plates, very generous amounts of car parking and it’s situated close to surrounding amenities such as retail and similar office buildings.”

Aviation House boasts a 100 per cent occupancy from three AAA-rated Commonwealth of Australia tenants, which Mr Heather said was particularly attractive to potential investors.

“The fact that you have three different government tenants minimises the binary risk of any whole building vacancy,” Mr Heather said.

Mr Heather said Canberra averages between six and 10 office building sales worth more than $50 million and larger assets were particularly attractive to interstate and offshore buyers.