Alcon-Bricktop partnership acquires Varsity Lakes office building for $11.4 million
Alternative investment manager Alceon has expanded its property interests on the Gold Coast with the $11.4 million acquisition of The Atrium, a three-level office building at Varsity Lakes bought in partnership with Sydney-based real estate and funding solutions business Bricktop Group.
The building, located at 15 Lake Street in the heart of the Varsity Lakes commercial precinct, has been secured by a stand-alone joint-venture vehicle Bricktop Alceon Pty Ltd from offshore vendor Jingfei Huang in a deal negotiated by Colliers.
The Atrium was acquired by the partners on a majority vacant basis after federal government anchor tenant Services Australia vacated the building in March this year.
However, Bricktop Alceon has quickly filled the space after securing a 10-year lease with an expanding education provider across 2,150sqm of the building.
Services Australia (Centrelink) had occupied 44 per cent of the 3,750sqm building, with the lease to the new tenant now taking the property to 97 per cent occupancy on a 7.5-year WALE. The partners say they are confident they can achieve full occupancy within the next 12 months.
Todd Pepper, Executive Director of Alceon Qld, said The Atrium represents a strategic acquisition for the group on the Gold Coast where the company recently completed development of Acuity Business Park at Robina.
“In the current construction environment, The Atrium was a compelling opportunity for us as the purchase price is more than 50 per cent below replacement cost at $3,100 per square metre,” he said.
“After Services Australia vacated the building in March this year, we acquired the property on a majority vacant basis, with the capability to enhance the income up to $1.7 million net per annum.”
The Atrium, located within the Bond University education precinct, is the fifth commercial asset acquired by Alceon on the Gold Coast. The company had previously owned the Foxtel building in Robina which it sold to Centuria for $46M, while it also developed and on-sold the Metricon, Wise Medical and TAFE campus buildings at the Acuity Business Park for in excess of $130M.
Alceon Qld Director, Tim Farquhar was responsible for the lease and commented that “We have so far leased over 18,000sqm of education space over the past five years in southeast Queensland. Over the longer term, The Atrium represents an opportunity for us to convert this building into a social infrastructure asset to meet significant backfill demand for education within the local area from vocational, ELICOS (English-language course) and ancillary care providers.”
The partners’ confidence in the Gold Coast market is buoyed by the city’s 6 per cent office vacancy rate which is forecast to fall to 2 per cent by the end of 2025.
The Lake Street property, a modern office building constructed in 2007, is currently tenanted by Jetts Fitness, LINK Business Brokers and Gold Coast Medical Precinct Varsity Lakes.
The building has 162 onsite car parks, providing an impressive one bay per 22sqm in the Varsity Central precinct.
“The speed with which the new buyers were able to secure a new tenant for the building reflects not only rising demand from a resurgent education sector, but the underlying demand for premium office space on the Gold Coast,” said Colliers Gold Coast Director in Charge Steven King.
“The sales campaign for this office property drew a strong field of prospective buyers looking to lock into prime opportunities that the Gold Coast market continues to offer on the back of sustained population and business growth across the city.”
The partners are planning improvements to the building over time, including enhancements to the external facade and upgrades such as solar panels that will take the building to a four-star NABERS rating or better.