A Woden office block has sold for a loss of more than $1 million, two years after it last changed hands.
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Commercial property investor and funds manager Arcana Capital purchased the Capital Centre at 2-6 Shea Street, Phillip for $17.4 million.
The office block's tenants include Aboriginal Hostels Limited, a non-profit company owned by the federal government, and Suncorp.
The seller, a Sydney investor, bought the property in March 2021 for $18.75 million.
It marks just the second major office sale in Canberra this year, amid subdued market conditions.
New owners to find tenants 'as soon as possible'
New owner Arcana Capital is headed up by former Queensland premier Campbell Newman.
In a statement, Arcana Capital confirmed the Phillip building was 62 per cent leased, however a two-year rent guarantee over the remaining vacancy was included in the purchase price.
A rent guarantee means the seller agrees to pay the buyer the rent for the vacant space.
The group intended to "seek to fill the property's vacancy as soon as possible", the statement read.
Successful leasing would increase the property's capital value to align with comparable recent sales, the group said.
![The Capital Centre in Phillip has sold to an investment group. Picture Cushman and Wakefield The Capital Centre in Phillip has sold to an investment group. Picture Cushman and Wakefield](/images/transform/v1/crop/frm/146508744/acd3e8ce-3ee0-4334-a0f6-50059c53b96d.jpg/r0_21_1920_1100_w1200_h678_fmax.jpg)
Arcana Capital manager of investor relations Colby Phillis said the building was appealing due to its location in a high-growth area.
"We're delighted with this acquisition of a high-quality, flexible commercial office in one of Australia's strongest office leasing markets at a [capitalisation] rate of over 9 per cent on the fully leased net income," Mr Phillis said.
The office has a weighted average lease expiry of about three years.
The four-week expressions of interest campaign was led by Cushman and Wakefield.
Head of national investment sales Daniel Cullinane said there was interest from local, interstate and international groups.
He said while higher interest rates had hampered the market, there was still strong demand for the "right assets".
"We've done a number of deals this year and they've all been really well contested," Mr Cullinane said.
"For the right assets, there's a lot of demand but for assets that don't offer a lot of value-add ... it's a lot harder."
Market conditions a far cry from 2022
The sale price was a reflection of the dramatic shift in office market conditions since 2022 when a record $1.5 billion worth of office transactions took place.
Only one other significant Canberra office building has sold this year, a recent report by Knight Frank found.
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Canberra developer Evri Group purchased 54 Marcus Clarke Street from Centuria Capital Group for $23 million in June.
The Canberra Office Market Report found investment activity had been subdued in 2023 but was expected to pick up as inflation slowed.
"Looking ahead, as the economic outlook has become clearer along with Canberra's blue chip tenant profile and competitive yield advantage, investor activity is likely to pick up over the medium term," the report stated.
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