Commercial towers prove a big hit PARRAMATTA in Sydney's west has emerged as a hot spot for commercial office towers. Brompton Asset Management has snapped up the Sydney Water headquarters building while giant superannuation fund AustralianSuper will put NSW Police headquarters on the market in deals worth about $400 million in total. Brompton Asset Management, a British group, paid $166m for the Sydney Water building, which Brookfield Multiplex was commissioned to develop in 2007. The sale of the tower, which comprises 23,000sq m of A-grade office space across 15 storeys and 340sq m of retail space, was flagged in The Australian earlier this month. Brompton's purchase on a yield of 6.95 per cent will help drive up office values in the area and in suburban locations nationally. The group was drawn in partly by the long lease to Sydney Water, which occupies 98 per cent of the tower. Josh Cullen, Scott Gray-Spencer and Michael Andrews of CBRE brokered the sale. Mr Cullen said: "A result like this demonstrates the continued strength of foreign capital seeking quality tenure investment assets in the Australian market." He added that on a relative basis, returns in Australia were still "very attractive." Mr Cullen also backed the area's prospects, saying that future growth would evolve with the commencement of the planned retail and office development Parramatta Square, with quality tenants being won and developments getting under way. Jones Lang LaSalle's head of international investments Australia, Simon Storry, who acted for the buyer, said the purchase was the fourth investment made in Australia by London-based Brompton Asset Management on behalf of its discretionary real estate fund. He said the fund, managed by former Citigroup chief investment officer Stuart Webster, had made close to $500m worth of investments in Australia. In August, Brompton bought Canberra's Industry House complex from Andrew Roberts' CorVal Partners for $151.7m, the largest office transaction in the national capital this year. AustralianSuper is looking to capitalise on the upswing in major transactions by bringing 1 Charles Street, the NSW Police headquarters in Parramatta, to market by early next year. The building is likely to attract a price of $240m. CBRE's Rick Butler and Mr Cullen are handling the sale. The 10.5-year weighted average lease could see it trade at a level that reflects a return of about 7.5 per cent. Agency Savills expects market yields in Parramatta to tighten further as A-grade buildings with strong lease covenants transact. Two smaller towers, 88 Phillip Street and 91 Phillip Street, are believed to be in due diligence. AustralianSuper, which gained the tower when it merged with Westscheme, declined to comment on potential disposals.