Orchard's solid buy at the Rocks

ORCHARD's Commercial Office Fund has bought an office building in the Rocks precinct in Sydney for $54.5 million on a market yield of 6%.

Located at 85 Harrington Street, the property comprises 8,062 sqm of office space as well as 52 car parks.

The building is currently fully leased, with QBE Insurance Group occupying over 95% of the building. QBE has recently exercised its option to extend their lease until January 2012.

Orchard’s chief executive David Hinde said the purchase is part of the fund’s strategy of increasing exposure to the Sydney office market.

“The strong demand for midtown Sydney CDB office space is being driven by the lack of availability of quality A and B grade properties at a competitive price point. Recent leasing activity has resulted in limited supply in the midtown sector, which we believe will translate into strong rental growth into the future.

“With the Sydney CBD leasing market continuing to improve, I am confident the acquisition of 85 Harrington Street will enable us to take advantage of the upward movement we have seen recently with the successful leasing of 233 Castlereagh Street,” he continued.

In addition, Hinde said the purchase coincides with the successful leasing of over 5,000 sqm of office space at the Orchard Diversified Property Fund and the Commercial Office Fund owned 233 Castlereagh St in Sydney’s CBD.

Lease transactions at 233 Castlereagh St include to Singapore Airlines and Dolby Laboratories, joining Moray & Agnew Solicitors, General Pants Co. and Carlson Wagonlit Travel which leased another one and a half floors.

The leases have reduced the vacancy rate at the property from 40% when Orchard purchased the property last September to just 4%.

Australian Property Journal