$7m for CBD office
A SOUTHPORT CBD building has been snapped up by a Sydney investor for $6.973 million, in a further sign of a strengthening Gold Coast office market.
Southport Chambers at 56 Nerang St was sold by Life Settlements, which bought the property in 2008.
The fully leased, threelevel building has a net income of $525,000 and sold on a yield of about 7.5 per cent.
The sale came after Slater and Gordon Lawyers signed a five-year lease for two-thirds of the third level.
Life Settlements director Stephen Knott said it put the building to the market because it had become surplus to its needs.
“We’ve owned the building for 10 years and the business has changed. Originally it was a core part of what we needed. We moved half our business offshore about five years ago and so it became non-core,” he said.
Mr Knott said the “dramatic drop” in the vacancy rate in Southport over the past few years provided renewed impetus to sell the property.
“We also have a couple of partners looking to retire so it made sense to see if there was an opportunity to sell. We just needed the right sort of investor. Given the size of the building we didn’t want to make a mistake selling it so we needed to be patient.”
Mr Knott said signing Slater and Gordon as a tenant also made the building appealing to investors.
“We were looking for an investor who has a portfolio and is looking to add to it and we ended up with the ideal candidate. They are Sydneybased and successful business people in their own right. They are accumulating a portfolio up and down the east coast. This is their first foray into southeast Queensland.”
Mr Knott said the building had been a cashflow positive asset for Life Settlements.
“It was always a case that if the opportunity arose, we would sell, otherwise we were happy to sit on it. We will continue to occupy part of the top floor and maintain our existing presence.”
Marketing agent James Crawford, of Colliers International Gold Coast, said the buyer was looking for yield.
The returns on the Gold Coast were more attractive than the returns in the Sydney market, he said.
“The campaign was well received.… But it wasn’t until we secured Slater and Gordon that investors felt confident to make offers.”
Southport Chambers is on a 944sq m site and has a net lettable area of 2065sq m.
Tenants apart from Slater and Gordon include International Business Institute, Eagle Academy and Keypoint Business Consultants.