Canberra Times: Prime commercial sites passed in at Civic auctions (22 June 2010)

Canberra Times: Prime commercial sites passed in at Civic auctions (22 June 2010)

The following article has been reproduced from the Canberra Times:

Prime commercial sites passed in at Civic auctions


A glut of commercial development space in Canberra and fears of a legal challenge over a planning amendment on City Hill are being blamed for two premium development blocks at Civic being passed in at auction yesterday.

Billed as ”sensational”, ”the pulse of the city” and the ”city’s ultimate address”, the London Circuit car park sites failed to meet the ACT Government’s reserve price.

While five Canberra developers made bids, interstate institutions and listed companies snubbed the sale.

Commercial agents said it was not the right time to offer such big sites when the huge Section 63 car park site nearby sits undeveloped and uncertainty lingers over an office vacancy blow-out.

The Save City Hill Group, comprising architect and activist Jack Kershaw, the Walter Burley Griffin Society and 2007 national gold medal winning architect Enricho Taglietti, said the auction’s result highlighted planning problems on City Hill.

Mr Kershaw said the group was getting a legal opinion on whether it could challenge a National Capital Authority planning amendment. Left unchallenged the amendment would allow new City Hill buildings to dominate over Parliament House.

Colliers International ACT chief executive Paul Powderly said the auction was always going to struggle and an emailing campaign by Mr Kershaw was not helping.

”A lot of people are saying ‘I don’t need the headache’,” he said.

”It’s hard enough doing a good project let alone having a whole lot of baggage with it.”

CB Richard Ellis ACT managing director Nick McDonald Crowley said he was not surprised the blocks were passed in, but said Mr Kershaw did not spook the market.

”It’s disappointing. These blocks are pillars of Northbourne Avenue. I would not like to see them go in a fire sale,” he said.

Leighton Properties and Mirvac paid $92million for Section 63 in December 2007 and are yet to begin work on the site, that allows commercial offices, a hotel, retailing and residential.

The hotel site offered yesterday, with views over City Hill, Lake Burley Griffin and the Canberra CBD opposite the Sydney Building, was passed in at $5.2million. The other site for a mix of residential, commercial and retail nearby was passed in at $8.6million.

The hotel site requires 400 public short-stay car parks, in addition to standard parking requirements. Father and son principals of the Doma Group, Ivan and Jure Domazet, opened the bidding at $2million and lodged the final bid, ahead of the Katheklakis and Notaras Group.

The Doma Group also featured in a three-way tussle for the mixed-use site opposite the Melbourne Building, which was passed in after father and son developers Gary and Anthony Willemsen bid $8.6million. Amalgamated Property Group was also bidding.

Jones Lang LaSalle regional director of sales and investment Greg Lyons said the hotel site’s car-parking requirement added an expensive component over and above what parking requirements the development generated.

The conservative bidding showed it was still difficult to raise funds in the commercial property sector, he said.

Mr Lyons said offering the two sites at once in close proximity was not too much for the market, as they were different products.

The Doma Group recently bought a 1.97ha car park site in Barton in a joint venture with the Morris Property Group, for $16.5million.

The group lodged last week a development application to build 44 apartments on Kingston Foreshore island for $14.5million.

Mr Powderly said the auction was always going to struggle due to the sheer scale of development and requirement of off-site works, which made it harder to secure capital funding. Negotiations are ongoing over the sale of the two sites.

Note: copyright of the material in this clipping resides with Fairfax Media. Usage permitted in accordance with the Australian Copyright Act 1968, Section 42: Fair dealing for purpose of reporting news. Source: Sunday Canberra Times – 28 March 2010

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