Property

The GPT Wholesale Office is building up its portfolio.

The GPT Wholesale Office is building up its portfolio.

Two dominant owners have emerged for a large swath of the national office market, with GPT Group in the process of acquiring $679 million worth of prime buildings.

This follows the completion of the Dexus Property and Canada Pension Plan Investment Board takeover of the Commonwealth Property Office Fund (CPA), as part of which GPT entered into a binding memorandum of understanding in relation to the acquisition of the four properties.

Under the deal, the properties will be bought by the GPT Wholesale Office Fund. They are: 750 Collins Street; half of 2 Southbank Boulevard, Melbourne; half of 10 Shelley Street, Sydney; and all of 655 Collins Street, Melbourne.

GWOF's management expects settlement on 750 Collins Street and settlement on 655 Collins Street to occur within the next four weeks. 2 Southbank Boulevard and 10 Shelley Street are subject to pre-emptive rights processes.

Last month, the GPT Wholesale Shopping Centre Fund agreed to buy CPPIB's 50 per cent ownership of Northland Shopping Centre for $496 million.

The sale comes as Dexus moved to 100 per cent ownership of the remainder of CPA's $4 billion office portfolio, making it the most dominant office landlord in the country.

Dexus now owns outright or has interests in such properties as 5 Martin Place and Grosvenor Tower in Sydney and 360 Collins Street and 385 Bourke Street in Melbourne.

The change in ownership comes amid a reduction in sublease availability across CBD office markets, according to leasing agents.

Sublease availability is the office market barometer of business confidence. The reduction over the first quarter is the first sign that corporate Australia is moving from a consolidation to a growth mode.

JLL's head of office leasing, NSW & Australia, Tim O'Connor said that, while the statistics showed the national CBD office market vacancy rate remained at 11.7 per cent in the first quarter of 2014, JLL recorded a reduction of 11,500 square metres in sublease availability across CBD office markets. Sublease availability fell in all CBD office markets except Melbourne.

''The reduction in sublease availability over the first quarter is the first phase of a metamorphosis from a weak leasing market to the early stages of recovery,'' Mr O'Connor said. ''For a company to remove sublease space from the market implies it is likely to make headcount increases over the next two to three years.''