The apartments at 111 Castlereagh Street are also part of the wider complex. Picture: Hugh Joyner from Hugo Agency.
US funds management giant Hines is in talks to buy the 121 Castlereagh office complex in the heart of the Sydney CBD from Cbus Property in a deal worth about $220m.
The deal is a shot in the arm for the office market, which is digesting an unprecedented flood of towers hitting the block as vendors look to sell out in a $10bn rush to market ahead of higher bond yields hitting valuations.
Cbus Property is selling premium offices as it pours funds into new projects and recently sold interests in 5 Martin Place, Sydney, and in Melbourne’s 171 Collins Street, to Mirvac’s flagship office fund for close to $640m.
The impending 121 Castlereagh deal is being struck at an initial yield of about 6.1 per cent, showing the ongoing demand for premium office space, which is forecast to perform strongly over the remainder of this cycle as the office market shifts into recovery.
The property at 121 Castlereagh, Sydney
Buyers are chasing high-quality assets while lower grade buildings are coming under pressure as tenants seek to upgrade. The building at 121 Castlereagh Street is part of the larger mixed use redevelopment of the former David Jones menswear store.
Retail property heavyweight Scentre Group and Cbus Property purchased the historic David Jones Market Street building in Sydney’s CBD for $360m in 2016.
They transformed the Sydney CBD landmark in Sydney’s Hyde Park precinct that was originally built in 1938. Scentre handled the retail while Cbus Property had carriage of the offices and luxury apartments in Sydney’s Hyde Park precinct.
Hines is buying the six-level premium office stratum which sits over the expanded Westfield Sydney luxury retail precinct.
Completed in 2025, the original site was redeveloped into 11,500sq m of premium office space where workspaces are connected by a central atrium that draws in natural light. Tenants include APA, The Commons and The Mint Partners.
Hines is keen to boost its exposure to Australia’s office sector, partly as minimal new supply is expected from 2027 onward, positioning the sector for a fundamental rebound and above-average forward rent growth.
The recovery dynamic is also backed by the supply of A-grade space tightening meaningfully over the past 12 months. Sydney office leasing demand has also been on a positive trend, though tenants remain selective, with demand concentrated in high-quality CBD assets.
The deal is being brokered by Cushman & Wakefield’s Josh Cullen and Mark Hansen and Ray White Commercial’s Ian Hetherington and Ursula Hunt.
They and the parties declined to comment but the building also drew interest from Hong Kong-based PAG and local real estate funds group AsheMorgan.
The prime-grade office tower spans 11,480sq m and it is underpinned by a 6.82-year weighted average lease expiry, with a fully leased net income of $14.38m.