The Sydney CBD car park industry is facing unprecedented challenges as the City Council pushes to reduce car parking ratios in new developments. The move, aimed at promoting sustainable transportation and reducing congestion, has sent shockwaves through the local car park occupier and investment community.
In recent years, car parks in the Sydney CBD have been a popular asset class for investors, offering steady income streams, long-term value appreciation with negligible capital expenditure required. However, the changing landscape of urban mobility and the council's commitment to prioritising alternative modes of transportation are reshaping the dynamics of the asset class.
According to Brad Hamilton, Cushman & Wakefield’s Director Capital Markets, "despite the changing dynamics of urban transportation, Sydney CBD car parks will always be in demand and needed. They serve as the vital connective tissue between commuters, businesses, and the city itself, providing a convenient and secure solution. As long as there are vehicles traversing our streets, the demand for reliable parking spaces in the heart of the city will persist."
Against this backdrop, the highly sought-after property at 109 Pitt Street – Carpark has been listed for sale. The Property boasts an impressive 114 car parking spaces, generates approximately $1.9 million in net income and is currently leased to Secure Parking until 2027. Secure Parking are part of the esteemed Park24 group, a listed parent company with a market capitalisation of around $4 billion and is for sale through Brad Hamilton of Cushman & Wakefield.
The sale of 109 Pitt Street comes at a time when car parks in the Sydney CBD are being identified as a diminishing asset class. City of Sydney Council actively advocate for the reduction of car parking ratios in new developments to encourage sustainable transportation options and alleviate traffic congestion. An example of this is Charter Hall’s recently approved 2 Chifley Square, which proposes the removal of 361 parking spaces to be replaced with a ~64,000 square metre premium grade office tower.
Furthermore, the proposed Sydney Metro West and Sydney Metro East projects are expected to have a maximum of 70 car parking spaces across their vast combined gross floor areas of 70,000 and 80,000 square meters, respectively. These initiatives reflect the council's commitment to creating a more liveable and pedestrian-friendly city centre.
109 Pitt Street is located within the CBD Core and Tower Cluster Zone, near the corner of Pitt and Hunter Streets. It adjoins Milligan's Pitt & Hunter St Development and the proposed location for Sydney's Metro West Station and OSD (Over Station Development).
Mr Hamilton said, “109 Pitt St – Carpark offers buyers an opportunity to acquire a secure and defensive cashflow, in an extremely supply constrained asset class, located in a precinct set to undergo one of the largest CBD urban transformations on record.”
The vendor, veteran property developer Andrew Richardson, initially planned to amalgamate the building for a new mixed-use development, following the successful model seen at Milligan's Pitt & Hunter St project. However, Mr Richardson has decided to capitalise on the property's desirability and recycle the funds into other projects.