Fringe demand grows The sale of the supermarket-dominated retail centre under the Coca-Cola sign in Kings Cross highlights the demand for Sydney's city fringe is increasing. A Chinese buyer, based in Sydney, paid $23.8 million for the site that was sold by Challenger's Premier Hybrid Property Fund. The property was hotly contested, according to the selling agents, Warren Duncan and Miron Solomons from City Commercial, and CBRE's Steve Lerche. Mr Duncan said the metropolitan office and retail markets had maintained high values and were favoured by investors who wanted to be near the city but needed access to car parking and arterial transport routes. CBRE director of capital markets Daniel O'Brien said south Sydney was also in high demand, as evidenced by some recent sales. He said that in January, Liv Style Group snapped up an art deco warehouse, office and showroom building for $4.4 million. The 1290-square-metre property at 755-759 Botany Road has been put forward for rezoning, which would allow residential redevelopment of the site. According to the latest research from Colliers International in its Sydney Metro Office Research and Forecast Report, about $1.22 billion of Sydney metro office assets changed hands during 2012, the highest volume since 2007. The report said that during the past year the fundamentals of the Sydney metro office market had been strong, with tight vacancy rates, decreasing incentive levels, strong rental growth for good-quality assets and low levels of vacant new supply, and this was attracting investors. "The overall strength and performance of metro office markets has seen investment activity ramp up," the report said. Effective rents have increased, by as much as 10 per cent in some markets over the past 12 months, as face rental growth continues and incentives remain tight. In contrast, Sydney's CBD has experienced a decline in effective rents and higher levels of large vacant space over the same period. It said the average rent for A-grade properties was about $300 a square metre. In the report, Colliers International national director of office leasing Robert Gishen said rental growth was one of the biggest factors attracting investors to the Sydney metro office markets. "Cost-conscious tenants and consolidation by businesses has also seen CBD tenants look to reduce their accommodation bill and move out to the CBD fringe and other metropolitan markets," he said. Mr Gishen said tenant demand in the Sydney metro office market remained at below-average levels, but the diversity among the tenants had been a driver of leasing activity.