Marquette, Dexus Seal Deal for Brisbane Office-to-Beds Tower

It has been a tortuous 12-month journey for Marquette Properties’ Toby Lewis in his bid to acquire 41 George Street in Brisbane. News of the $120-million sale made headlines this year after it traded at a 25 per cent discount on its listed sale price of eight years ago. But the deal was far from done and dusted on the 27-storey office tower. “The property was marketed close to two years ago as the government was leaving the building in April 2024,” Lewis said. “We spent the past 12 months putting the deal together, dealing with design, getting approvals, builders and engaging a student accommodation operator. “A lot of parts of the process went really smoothly, supported by Hutchinson Builders and Unilodge. “But halfway through the deal all the policies about immigration and student caps threw a lot of uncertainty into the sector .” The deal was also heavily impacted by decisions around foreign investment tax and increased rates for purpose-built student accommodation and build-to-rent assets in Brisbane, which Lewis said “flies in the face” of the housing shortage and supply aspirations. ▲ New York alternative asset manager Blackstone spent $500 million on Student One in Brisbane, which controls three sites with about 2300 beds. Lewis said Marquette had to “pivot” its capital structure from overseas capital to onshore capital, signing a joint-venture deal with Dexus to secure the asset, which will be developed to be sold. The asset is expected to be valued at about $500 million upon completion. The office block is being acquired through Dexus’s opportunistic fund series, Dexus Real Estate Partnership (DREP), with 5 per cent of the economic interest held by Marquette Properties. Dexus and Marquette Properties will be joint development managers on the project. Dexus Group chief executive Ross Du Vernet said the transaction demonstrated the organisation’s ability to leverage its broad capabilities across its platform to “create value for clients and investors”. “This includes special situations investing, office development and refurbishment, and the infrastructure team’s deep understanding of the Australian student accommodation sector,” Du Vernet said. The property languished on the market for more than 18 months and has been vacant for about six months. The City is home to about 16,000 students living in purpose-built student accommodation and Lewis said he was confident that Brisbane’s population would continue to grow. “There’s been no new student accommodation developed in the past few years,” he said. “Rents soared last year, and then the Student One Brisbane deal (Blackstone’s $500-million portfolio acquisition) really set the pricing. “Brisbane residential vacancy is sub 1 per cent and student accommodation vacancy is sub 1 per cent.” Lewis said they aimed to begin the two-year refurbishment and internal fitout of what will become a 1200-bed student accommodation tower in the next month, with a view to it being operational in 2026. The site at 41 George Street is one block from the QUT Gardens Point campus, and two blocks from the recently announced Griffith University campus at the former Treasury building. Marquette has been involved in the development of three other student towers in Brisbane and Lewis said he would be applying his learnings from those projects.

Office
Taryn Paris
Thu 03 Oct 24

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OfficeTaryn ParisThu 03 Oct 24

Marquette, Dexus Seal Deal for Brisbane Office-to-Beds Tower

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Taryn Paris
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