_Quintessential Equity buys commercial office building for $73M in Adelaide

December 19, 2022

Quintessential Equity is pleased to announce the off-market acquisition of 30 Pirie Street, Adelaide, a landmark office building located in the heart of Adelaide’s CBD.

Quintessential Equity purchased the property within its third commitment fund, Master Fund No. 3, for $73 million from Australian Unity Office Property Fund (AOF Fund), settling the transaction on 20th December 2022. A high-quality building in a prime location, 30 Pirie Street is an excellent investment for Quintessential Equity’s growing Adelaide portfolio.

Knight Frank agents Max Frohlich and Justin Bond, and Colliers agents Paul Van-Reesema and Alistair Mackie introduced Quintessential to the vendor.

Quintessential Equity will undertake significant refurbishment to regenerate the building both aesthetically and mechanically. With a substantial CAPEX budget of approximately $30 million, Quintessential Equity plans to carry out significant upgrades to the ground floor lobby, end of trip facilities, tenancy refurbishments, as well as modernizations to the lifts and building façade. Various energy efficiency initiatives are also planned to future proof the property, with a commitment to elevate the building to achieve a minimum 5 Stars NABERS Base Building Energy Rating.

30 Pirie Street will offer a variety of spaces including warm shell open spaces, fully-fitted suites and the regeneration of existing fit out, to meet a variety of tenant needs and create convenient and functional spaces to which the market has responded favourably.

The central Adelaide office block is currently 100 per cent leased to five tenants, including Telstra who account 91% of the building and have occupied the building since it was constructed. Telstra will be relocating to 60 King William Street upon completion, however propose to continue to occupy a portion of the building next year whilst their new tenancy is being completed.

Shane Quinn, Executive Chairman at Quintessential Equity, said “We are thrilled to have acquired 30 Pirie Street, a premium office building perfectly placed to capture demand for prime contiguous spaces. The acquisition allows us to build on our longstanding reputation and continued investment in Adelaide, growing our presence within a core CBD location.

“With over $30 million of upgrades planned to regenerate the building we intend to elevate the building to market leading in a prime CBD location. With Adelaide’s office market continuing to deliver strong returns, 30 Pirie Street will provide a high-quality income stream and exceptional tenant experience.”

Max Frohlich, Director, Head of Institutional Sales SA, said “twelve sales above $10 million have settled in Adelaide CBD since January 2022, reflecting a total sales volume of $441 million, up from a total sales volume of $251 million last calendar year. Around 70 per cent of these transactions occurred prior to the RBA’s first of eight consecutive cash rate hikes in May 2022.

“However, this excludes five assets which are in due diligence or have exchanged and are yet to settle; including these assets transaction volumes measure approximately $735 million in total.

“Due to the recent sharp rise in interest rates, buyer demand has shifted from core to value-add opportunities where the increased cost of capital can be offset with enhanced returns from active management initiatives. 30 Pirie Street is another great example of this.”

Justin Bond, Partner, National Head of Capital Markets, said “the Adelaide office market was very resilient through the pandemic and experienced little disruption compared to other larger cities.

“Sustained demand from government tenants and a broad mix of small to medium enterprises ensured that the market remained stable in the face of rising vacancy in most other states.

“For the majority of 2022 we experienced a dearth of transactions nationally whilst the market deciphered the impact of current global economic uncertainty. The sale of 30 Pirie Street is one of a number of national transactions we expect to complete prior to the Christmas break. These transactions will provide the market with renewed confidence going into 2023.

“We therefore anticipate genuine engagement from equity investors supported with debt solutions, to access the market looking for risk adjusted investments.”

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30 Pirie Street was originally constructed for and owned by Telstra in 1987 and maintains an excellent reputation in the Adelaide CBD. Situated in the city’s core precinct across from Adelaide Town Hall, the building consists of 23 levels of office above a ground floor and spans 24,078.6m2 of net lettable area. It features excellent on-floor ceiling height and natural light, and a double-height ground entrance. The building boasts prominent street frontage and proximity to pedestrian links, urban gardens, public transport, parking, and outstanding food and beverage offerings.

The building will be ideal for tenants in the Government, legal, IT, financial services, and engineering sectors, with Quintessential Equity looking to secure a range of contiguous-floor, single-floor, and split-floor/sub-500m2 tenants in future.

The purchase solidifies Quintessential Equity’s presence in Adelaide, with Lot Fourteen, 100 King William Street, 431 King William Street and Port Adelaide Distribution Centre representing over $950 million of investment in Adelaide.

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For further media enquiries and spokespeople interviews, please contact:

Jessica Magree

Arize Communications  

jessica@arize.com.au 

0432 559 212