_Office building in Adelaide’s CBD sells for $42.4m

The five‑level A‑grade building was acquired off‑market by a local private investor from Harmony Property Investments on a circa 6.25% yield. The deal was negotiated by Knight Frank agents Max Frohlich and Ryan Mills.

It was sold at an almost 5% premium on its previous sale in October 2020, when the property was purchased by Harmony Property Investments for $40.5 million.

Situated on a prominent 987sq m corner site with three‑street frontage to Hindmarsh Square, Pirie Street and Wyatt Street, the 4,626sq m building includes 62 basement car parks across three levels, representing the third‑best, and best standalone, car parking ratio in the Adelaide CBD core (1:75sqm NLA) - a significant competitive advantage in tenant retention and leasing appeal.

The property is 100% leased with a long-term WALE of approximately six years. The tenant profile includes Nova Entertainment, the Office of the National Rail Safety Regulator, Sony Interactive Entertainment and Stantec Australia, all of whom have demonstrated long-term commitment with recently renewed leases and a strong history of retention within the building.

Mr Frohlich said the sale of 75 Hindmarsh Square was the first sale of a major office building in Adelaide since 63 Pirie Street sold in mid-2025.

“We expect this to be the first of many transactions in 2026 as confidence returns and the market continues to move along its recovery path,” he said.

“Buyer sentiment in the market is very positive, and high-quality assets will be sought after this year.

“75 Hindmarsh Square appealed due to its fundamentals including its location, carparking ratio and strong tenancy profile and long WALE, with multiple tenants recently renewing their leases.”

Mr Frohlich noted that the broader outlook remained strong despite the RBA’s decision to raise interest rates this month.

“The outlook for recovery remains intact. The rate increase reinforces the importance of income growth as the key driver of returns through the early phase of the cycle,” he said.

“While higher rates may temper early signs of yield compression, the fundamentals underpinning commercial property returns remain robust, especially given the limited supply pipeline and widening economic rent spreads when compared with existing stock.

“This imbalance is expected to continue driving rental growth over the medium term, with gross effective rents for Adelaide CBD A-grade offices forecast to grow at an average of 4.3% per annum from Q4 2025 to Q4 2030. This sits well above the 10-year average to Q4 2025 of 2.4% per annum.”

Knight Frank’s outlook report, Australian Horizon 2026, released at the end of last year, named the Adelaide CBD as a hotspot for office investment this year as the commercial property market continues to recover.

According to the report, while often overlooked by investors focussed on the major East Coast centres, Adelaide has quietly shifted back to growth.

“Adelaide offers a relative value play with low transaction costs, and prime yields are already trending down as private investors compete to enter the market ahead of the anticipated recovery,” the report reads.

Mr Mills said Adelaide had been attracting a wider pool of buyers for some time, with investor interest expected to ramp up this year as market activity increased.

“Given the strong growth outlook for the income side of the investment equation, Adelaide’s office market is firmly in focus as an investment destination now,” he said.

Over the past year, Adelaide led the country with 11.6% annual effective rent growth, followed closely by Brisbane at 11.4%, with growth accelerating in Sydney (7.1%), Canberra (4.3%) and Melbourne (4.0%). Perth (-0.4%) lagged but is forecast to return to positive growth in 2026.

“The South Australian economy is forecast to grow with a wide range of industrial expanding, and this will underpin further growth in office rents.

“South Australia’s zero per cent stamp duty on commercial property transactions also remains a major competitive advantage on the capital side of the equation with the significant cost saving materially enhancing investor returns from day one.