400 Kent Street, Sydney, NSW

Client
Charter Hall Diversified Property Fund

Property Type
400 Kent St was purchased by Charter Hall in May 2005. It is an 11 storey office building completed 1992, refurbished in 2005. Total net lettable area is over 10,400m²*.

Background
The building was mostly occupied by Central Queensland University (CQU). They had a lease until 2022 on the Lower and Ground floors and Levels 1 and 3 to 11, comprising over 9,000m²*. Level 2 was not under CQU’s lease and had been vacant for some time with little leasing activity. The Owner had engaged a Major International Agent on an ongoing leasing programme; however this came under review and the Lessor called for leasing submissions from new Agents. Ray White was appointed with Knight Frank as Joint Agents in May 2011.

Marketing Strategy
With a large educational tenant occupying the entire building other than one floor this meant very high numbers of students passed through the lobby and used the lifts CQU had prominent branding in the lobby and also had a security guard on the ground floor that all students and visitors had to pass through before accessing any floor, even the vacant floor level 2. These factors all significantly narrowed the target tenant that would see value in coming to this building.

Ray White suggested a new strategy to focus marketing only to non-competing educational users. There was a targeted campaign to educational tenants across NSW by phone, email and letter. We liaised with consultants to prepare plans showing different densities of college fit outs.

Lease Process
From Ray Whites marketing we received interest from a fashion college seeking half the space offered, however we structured a transaction over the whole floor of 920m²* with staggered rental charges as part of the incentive to allow the tenant to grow into the floor.

We actively worked with the tenant for council approvals and fit out process. As a result the Lessor now had a 100% leased investment which was sold for $58,005,000 in July 2013 to Credit Suisse Asset Management.

Lease Analysis*

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