Eagle Property has purchased four adjacent stand-alone commercial properties in a prime
Newcastle CBD location as commercial property investment demand continues in regional
growth areas.

With prominent tenants such as the West Group, the acquired properties include 426 King
Street, 591 Hunter Street, 593 Hunter Street, and 615 Hunter Street, a combined 6500 sqm
block of land suitable for a wide range of commercial development options.

Made up of 15 tenancies including Property NSW and Pegasus, all four properties are fully
leased producing $2,100,000* of combined net annual income across the sites.

Current planning regulations will allow a GFA up to 35,000*sqm of commercial development
across the combined sites suitable for development including office, medical, residential,
and retail.

The Story

The campus of buildings known as “City Exchange” comprise 426 King, 591 Hunter, 593 Hunter and 615 Hunter Street, Newcastle West. These adjoining sites are located centrally in Newcastle, positioned between the Honeysuckle Precinct and Marketown Shopping Centre. All properties have strong individual property fundamentals on their own, however when combined form the opportunistic asset Eagle Property searches for in the market. The opportunity provided here is yield plus development in a strategic and emerging sub location of the greater Newcastle CBD.

The Newcastle Urban Renewal Strategy 2012 (NURS) identifies the West End of Newcastle as the future CBD. The strategy is underway and we have seen evidence the Newcastle CBD is moving from the East to the West. Older original CBD buildings to the East are being adaptively re-used for residential purposes or lifestyle commercial, such as Eagle’s repositioned 51-61 Bolton Street. Moving West there has been significant development in the Civic Precinct which has positioned itself as Newcastle’s education, arts and cultural precinct. The $100 million State Law Courts building along Hunter Street commenced the Civic Precinct redevelopment, along with stage one of Newcastle University’s inner city campus was completed in 2016, stage 2 is now underway in the Honeysuckle Precinct. To add to this area the former Council Administration Building has undergone a $50m+ transformation to the latest 5 star hotel in the Crystalbrook Collection named “The Kingsley”.

“City Exchange” sits between the Civic Precinct and the West End Precinct, more importantly they sit immediately adjacent the Honeysuckle Precinct and opposite the Honeysuckle light rail stop. The supply of land in the Honeysuckle Precinct is almost complete, with one further englobo parcel of land, positioned in the far west adjacent the Marina Precinct still to be released. The use for this site through community consultation is likely to be a mix of residential, entertainment, retail shopping, food and beverage as well as the potential for a convention centre.

“City Exchange” income is underpinned by The Wests Group, Property NSW, WSP, APP Corporation and local success story Pegasus who recently sold their proprietary site induction software programme to US company Avetta for approximately $160 million. Overall “City Exchange” comprises 6,900sqm of net building area and is positioned on 6,500sqm of land. The opportunity offers quality ‘B’ grade accommodation at under rented rate of $310/sqm net per sqm (approx. $400/sqm gross). A redevelopment concept by award winning Newcastle architects CKDS identifies this site as having surplus GFA of 28,800sqm in maximising the FSR of 5:1 and height limit of 45m.

“City Exchange” was refurbished in 2008 by the McCloy Group, who are also the vendors of 426 King Street, they are a long term reputable company most well know for their construction of the John Hunter Hospital in Newcastle as well as their many land communities developed throughout NSW and QLD

What we expect

Combined “City Exchange” provides a net income of $2,130,000 per annum. As a development site they are easily staged and hold the future potential for a combined total GFA of 35,750sqm of commercial buildings. The location between Honeysuckle and Marketown Shopping Centre balance the requirements for an acceptable government or corporate headquarters with the necessary staff amenity and conveniences needed to maintain effective staff.