Regular readers of the newsletter will be familiar with ParkScience views on how COVID has fundamentally changed the commercial parking business in Australia. These were set out in Crisis? What Crisis. No V shaped recovery for parking and COVID-19 and Parking, which have proven to be very close to what has occured.
Within every marketplace there are contrary positions and views, and we are seeing one of these in Sydney with Wingate, a substantial private investment and finance corporation contracting to purchase the 589 bay Quay West carpark from Mirvac in Sydney’s Rocks precinct, which is adjacent to Circular Quay.
Total acquisition costs are $55.79 million on an initial yield of 4.9% for a leasehold strata lot that has 67 years remaining. It is leased to Wilson Parking for a gross rent of $3.3m with two small retail tenancies totalling 598m2 under separate lease.
In the background, the largest owner of commercial carparks in Australia, DEXUS, has been steadily divesting itself of older commercial buildings (with substantial parking attached) and pivoting to premium towers that have far lower ratios of parking bays to office space. This commenced in 2018 with the sale of Southgate Tower in Melbourne (876 bays), and has continued with 383 Kent St (780 bays),309 Kent St (137 bays), 201 Miller St (120 bays), Grosvenor Place (561 bays) and 12 Creek St (124 bays). It has also commenced a $2.1bn twin tower development at Waterfront in Brisbane with Deloitte to move from the adjacent 36-year-old Riverside Centre tower, that has 530 bays. DEXUS has been an industry leader in positioning itself ahead of two significant shifts that we are now seeing in commercial property – a move towards premium office towers and the end of an almost 30 year one way bet on parking revenues and rents.
