Constitution Place, Canberra sells for $275 million as Capital Property Group enters deal with Investa Commercial Property Fund

Investa Commercial Property Fund, a prime office fund for institutional investors, has purchased the five-storey building at 220 London Circuit for about $275 million, market sources have confirmed.

The 22,300-square-metre office building is predominantly leased to the ACT government until 2041.

Capital Property Group is part of Capital Airport Group, which also owns Canberra Airport and is developing Denman Prospect.

Stephen Byron, CEO of Capital Airport Group, confirmed the group will retain the second, taller tower, which houses A by Adina hotel and KPMG offices.

"We are retaining the development's 12-storey office, hotel and retail building and will work alongside Investa to fulfil the potential of this thriving precinct," he said.

"Selling a portion of this development eases the financial strain COVID has placed on our aviation and property businesses.

"We are very much committed to creating exceptional developments and infrastructure for our home city of Canberra."

The $300 million Constitution Place development was completed in 2021.

Investa Commercial Property Fund manager Brendan Looby said the acquisition reflects the group's strategy to own prime assets that deliver solid rental growth.

"220 London Circuit is a prime asset in this highly desirable location," he said.

"The AAA rating of the major tenant, the ACT government, enhances the quality of underlying earnings and improves portfolio occupancy, [weighted average lease expiry] and diversification, while complementing the fund's active development pipeline."

The building also includes a restaurant, gym, end of trip facilities and parking for about 400 cars. It holds a 4.5-star NABERS energy rating and gold certification under the WELL building standard.

Investa head of investment management Jason Leong noted Canberra's low office vacancy rate as an attractive feature of the market.

"The Canberra office market continues to be resilient and underpinned by solid market fundamentals, with the lowest vacancy rates across the capital cities and steady rental gains particularly over the past twelve months," he said.

"Providing our investors with a diverse portfolio that gives exposure to office markets in key geographies, delivering secure cashflow is a core part of ICPF's strategy."

Paul Powderly, ACT state chief executive at Colliers, brokered the sale.

According to the Property Council of Australia, Canberra's office vacancy rate - which is calculated on whether a lease is in place - was 8.6 per cent for the six months to July.

The vacancy rate has continued to underpin strong commercial property sales in 2022, following a record year for the ACT in 2021.

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Most notably, Charter Hall has entered a deal to purchase the Geoscience Australia headquarters in Symonston for more than $370 million.

Once finalised, the sale will set the record for a commercial sale in the ACT, previously held by a $355 million sale on Marcus Clarke Street.

The Australian Taxation Office building in Civic is currently on the market, as is a portion of The Canberra Times' former office in Fyshwick.

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