Chatswood’s Zenith towers 100% leased: reinforcing market as a major commercial office precinct

7 December 2018

The Zenith becomes one of the most in-demand metro office properties in Sydney: Both towers now 100% leased after significant active asset management by Centuria’s unlisted funds team, in conjunction with partner BlackRock

Centuria Capital Group (Centuria, ASX: CNI) today announced that since acquiring The Zenith, – a two-tower A-Grade office building on Sydney’s north shore – it has completed over 44,500 sqm of leasing transactions across 54 individual deals. The building was purchased in July 2016 by Centuria through its unlisted funds business in partnership with a private real estate fund managed by leading global asset manager BlackRock.

  • Centuria and BlackRock have taken The Zenith to be 100% leased in just over two years.
  • A significant achievement, with over 44,500 sqm of leasing.
  • Tenants, new and renewed, include NSW government departments, a law firm, a listed property group, and a number of multinationals.
  • Active management and a targeted capital expenditure program has transformed the building into the future of workplace destinations.

The towers are now 100% occupied, with a WALE of approximately 4.5 years as at 1 December 2018. The success comes in a series of moves from Centuria that show it entering an arena above its weight category – including, most recently, the second largest commercial property transaction of the year, which saw the group acquire a $520.9 million portfolio for the Centuria Metropolitan REIT (ASX: CMA).

Centuria Head of Real Estate and Funds Management, Jason Huljich said that “the attraction of this building lies in the underlying management ethos. Our team have created a workplace that has everything possible to make travelling to and from work, and working, eating, and exercising throughout the day, as attractive and beneficial to the people in these buildings as possible. This naturally has great appeal for high-quality clients with record rents of up to $660 per sqm net achieved within the asset.”

Not just an office – but a lifestyle component

Centuria and BlackRock have completed a series of refurbishment projects to truly transform the buildings from offices to a premier workplace destination that is a hub of business, culture, entertainment and lifestyle. The building offers:

  • green spaces and gardens
  • a café and childcare centre
  • new end-of-trip facilities, including showers, lockers and bike spaces
  • a weekly exercise and wellness program.

With natural light on four sides and 360 degree views of Sydney CBD, the Blue Mountains and the Pacific Ocean, these features – as well as the property’s proximity to the North Shore transport network – not only make it attractive to organisations, but provide a significant and positive impact on the lifestyle and well-being of tenants.

In addition to the larger occupiers, Centuria and BlackRock innovatively constructed spec fitouts in smaller spaces to attract tenants and make relocation easy. This end-to-end process includes everything from signing to fitout, to dealing with landlords. Centuria and BlackRock also improved the building’s environmental footprint, achieving a 5-star NABERS Energy rating and 4-star NABERS Water rating.

Tenant profile

The towers’ tenants range in both company size and industry sectors. This includes blue chip Government tenants, Transport for NSW and the NSW Department of Health, which recently signed a 20,000 sqm renewal; and Lendlease, which has recently signed a 3,120 sqm extension with over Levels 3, 4 and 5 of Tower B for 5 years. These renewals demonstrate the Group’s strong retention of tenants, in addition to its capability to attract new ones. Such retention is made possible through Centuria’s close relationships and partnerships with tenants throughout the tenancy lifecycle.

The Group leased a further 1,869 sqm to McCabe Curwood in an 8-year deal, enticing the company out of the CBD into the value-for-money Chatswood locale.

Another 34 deals were made over part floors and suites over more than 15,600 sqm, including high-quality tenants Sennheiser, Australian Pharmaceutical Publishing Company, DEM Architects, Insurance Australia Group, Michael Page Recruitment, Altium, Regus and more, diversifying the tenant base and increasing the quality of the occupiers. The leasing deals extended the property’s overall WALE from approximately 2.7 years when the building was acquired to 4.5 years. We believe what attracts these tenants is Centuria’s long and proven record as a quality landlord and manager.

Market implications

The success of this building is testament to the experience and capabilities of Centuria’s and BlackRock’s in-house teams, but it also demonstrates a market turnaround for the North Shore. As rental levels hit new highs throughout Sydney and space becomes scarce, many blue ribbon tenants are finding value outside of the CBD, just like law firm McCabe Curwood.

Mr Huljich continued: “Astute buying and experienced and diligent active management have made The Zenith a success story. The building was purchased in conjunction with BlackRock for $279.1 million in July 2016: Centuria’s and BlackRock’s active management and development management expertise has increased the property’s capital value significantly since acquisition and driven a huge increase in tenant demand.