A lakeside suite of Tuggeranong office buildings leased to the federal government could sell for more than $70 million next month as major investors look to the safety of long-term tenants.
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The three buildings, once home to the Health Insurance Commission, have eight years remaining on a lease with the Department of Human Services and have recently undergone a $9.5 million refurbishment.
Selling agent CBRE's ACT managing director Andrew Stewart said there had been strong interest from a number of investors who were being priced out of the booming Sydney and Melbourne markets.
"It will probably provide an initial yield of 7 per cent per annum, which puts it in the mid-$70 millions range," he said.
"I think it's likely [headed] to an interstate investor or potentially overseas."
The 134 Reed Street package includes a three-storey main administration building and three-storey computer building including plant room built in 1987, and the four-storey Miller office building and three-level car park from 1995.
The building suite, with a lettable area of about 15,600 square metres, sold for $37 million in 1999.
Colliers International ACT state chief executive Paul Powderly then helped sell the property for $52.5 million to Allco in 2005.
Mr Powderly said the property would likely end up in the $70 million-$75 million range, with strong appetite from pension funds, offshore groups and the Australian superannuation markets.
"There is unprecedented international and national demand for long-term properties in the Canberra market," he said.
The nearby Manning Clarke Offices, about one-third the size, sold for $25.8 million in May last year with nearly nine years remaining on the lease.
Mr Stewart said CBRE was acting on behalf of the receivers of a debt owed to the Bank of Scotland. The property, which has 338 car spaces, is one of four Tuggeranong precincts used by DHS. The department has two four-year options on the Greenway property after the current lease ends in early 2023.
Expressions of interest close on September 17 at 4pm.
About 2200 staff from the separate Department of Social Services were expected to move into their new building in Tuggeranong within 18 months, a commitment which would lead to 22,000 square metres of leased space vacated across the capital.
