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Commercial Market Update – Gold Coast Cityscope April 2021

Gold Coast Cityscope

The latest research from Gold Coast Cityscope shows property sale figures have significantly decreased over the past three months. Sales recorded in the three months to March 2021 recorded 25 sales for a total of $64.3 million. Of this, $4.6 million was for commercial, $1.9 million was for commercial strata, $40.8 million was for retail, $5.1 million was for retail strata and $11.8 million was for other.

In comparison, the three months to December 2020 recorded 53 sales for a total of $106.8 million. Of this, $54.3 million was for commercial, $15.8 million was for commercial strata, $11.9 million was for retail, $15 million was for retail strata and $9.7 million was for other.

The latest data raises the 12-month total to over $371.7 million, only $7.4 million less than the previous 12-month period.

The table below shows sales recorded for the past eight updates of Gold Coast Cityscope:

Gold Coast Cityscope

The most significant sales recorded this quarter together totalled over $41.1 million.

Bunnings Robina has been sold for $28.05 million to David Feldman Developments Pty Ltd. Jacob Swan, Sam Hatcher and Nick Willis of JLL negotiated the sale, which represented an initial yield of 5.49% on a passing income of $1,540,531 (n). The 12,803 sqm warehouse was purpose built for Masters in March 2014 (Masters closed in late 2016) and converted for use by Bunnings 2018 (opened December 2018). The property includes car parking for 321 vehicles. Original development cost, $15.75 million.

Primewest Property Income Fund, an open-ended unlisted fund, has purchased Bluebird Early Education Centre in Robina for $7.25 million through Perpetual Corporate Trust Limited. The sale represented an initial yield of 5.86% on a passing income of $425,000 (n). The single-storey child care centre was purpose built in 2004 for Smarter Kids Kindergarten and was recently refurbished.

A Gold Coast investor has purchased 86 Bundall Road, prior to auction, for $5.8 million. The property includes a two-storey 2,017 sqm showroom/office building fronting Bundall Road and a single-storey, 90 sqm warehouse to the rear. Steven King and Marlon Crawford of Colliers International Gold Coast negotiated the sale.

Gold Coast Cityscope

Properties currently listed for sale include:

  • 8-10 Windmill Street, Southport – a large warehouse to the rear with a ground floor showroom and first floor office space to the front. The property includes undercover car parking for 25 vehicles. Total building area around 1,645 sqm. For sale with an asking price of $4.25 million; agent, Corwells (Cody Hart).
  • 3 Beach Road, Surfers Paradise – a 769 sqm vacant block of land. For sale with an asking price of $3.95 million; agent, Cushman & Wakefield Gold Coast (Richard McCouaig and Ed Howard).
  • 46 Scottsdale Drive, Robina – a 4,719 sqm vacant block of land; agent, CBRE Gold Coast (Tania Moore and Mark Witheriff).
  • 25 Griffith Street, Coolangatta – a two-storey building with a ground floor retail shop and a three-bedroom, two-bathroom residence upstairs. Building area, 348 sqm. The property includes a swimming pool and two-car garage to the rear. For sale with an asking price of $2.9 million; agent, Tsimos Commercial Real Estate (John Black).

Properties currently under contract (conditionally or unconditionally) include:

  • 287 Scottsdale Drive, Robina – a 6,985 sqm vacant block of land, part of the M1 Business Precinct. Under contract; agent, CBRE Gold Coast (Mark Witheriff and David Corke).
  • 9 Energy Circuit, Robina – a 4,781 sqm vacant block of land, part of the M1 Business Precinct. Under contract; agent, CBRE Gold Coast (Mark Witheriff and David Corke).
  • 82 Griffith Street, Coolangatta – a 266 sqm, two-storey office building. Under conditional contract; agent, DJS Stringer Commercial (David Stringer).
  • Home & Life Centre Robina – a 14,782 sqm home and retail precinct. Under contract; agents, JLL Brisbane and Savills Brisbane.


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Olympian Plans $440m Coffs Harbour Film Studio

Coffs Harbour

Property developer Peter Montgomery is planning a $440-million movie studio conversion in Coffs Harbour, teaming up with Hollywood heavyweight and mid-north-coast local Russell Crowe, and US movie producer Keith Rodger.

The trio are preparing a state significant development application for the project, which would turn Pacific Bay Resort into a feature film production and post-production complex with accommodation for cast, crew and their families.

The new facilities would add to the 40ha property’s facilities that include an apartment complex, nine-hole golf course, three swimming pools, tennis courts and the National Marine Science Centre.

A film and Olympic museum, art gallery and entertainment facility would also be added to the property’s vacant block at the corner of Bay Drive and the Pacific Highway, Coffs Harbour.

A second backlot is under consideration at the nearby Bonville Golf Resort with its “mansion-like clubhouse and accommodation fronting picturesque fairways surrounded by rainforest”.

Coffs Harbour

▲ An overview of the Coffs Harbour film studio conversion at Pacific Bay Resort 

Montgomery has formed many connections in the industry, was the vice president of the Australian Olympic Committee and is currently ASX-listed, MFF Capital Investments’ independent non-executive director.

The former Olympian, who represented Australia in water polo at the Munich 1972, Montreal 1976 and Moscow 1980 games, and as team captain in 1984 in Los Angeles, has a large property portfolio including the Pacific Bay Resort, Bonville Golf Course and properties in Sydney.

“A great deal of planning and consultation have gone into the design of the proposed Pacific Bay Resort Studio and Village,” Montgomery said.

“Its proximity to Coffs Harbour airport and the data centre are complemented by the region’s outstanding climate and natural landscape.

“Our studios will cater for major international feature films as well as local productions, giving them the bonus of resort lifestyle in facilities that are designed to bring employment to the region and work in harmony with Coffs Harbour’s Regional City Action Plan.”

The project is being spearheaded by producer Rodger, who said it was designed to make production more efficient, cost-effective and enjoyable for actors, crews and their families.

“By providing everything cast and crews need within the studio complex we can eliminate the time usually lost due to the logistics of bringing a production together in a major city or isolated regional studio,” Roger said.

“Our multiple Leading Edge Data Centre 400GB fibre links as well as our onsite processing and storage capabilities will allow offsite producers remote production access with near-zero latency.”

Rodger said the project would also mix film-making with education, supported by Australian Film, Television and Radio School.

Also involved in the development is lead architect Rob Harper of RDO Architects and engineer Geoff Slattery, Chris Wilson and Rachel Streeter of Willowtree Planning, together with ECI involvement from Buildcorp, which was represented by founder Tony Sukkar during the project launch.

The site was originally a banana plantation before the construction of Pacific Bay Resort in 1988.

The Pacific Bay Resort Studios & Village developers anticipate they should be able to secure consents, agreements and approvals within a year with strong support already shown by NSW deputy premier John Barilaro and Member for Coffs Harbour Gurmesh Singh.


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Landlords Steady for Long-Haul Recovery

Commercial landlords are being pressed to “dig deep” in the crawl to a long haul recovery, as heightened leasing perks are forecast to hit a record 39 per cent by the end of 2021.

Leasing incentives are projected to tip into next year—nearing a 40 per cent rise from 2020 year-on-year.

Hybrid working trends and unprecedented levels of subleasing stock have pushed incentives to levels not seen since the early 90s, according to CBRE senior research analyst Nick Baring.

Vacancy rates are poised to hit short of 12 per cent by the final quarter of 2021, a 45 per cent rise from January this year.

In response to the threat of long-term vacancies, institutional landlords are marketing free rents, contributions to fit-outs and early access to garner quality tenants. Private landlords will mostly feel the pinch, competing with minimum financial resources to remain competitive.

It is unlikely incentives will decline in Melbourne’s CBD until at least the first quarter of next year, while Melbourne’s metropolitan landlords won’t experience relief until the second and third quarters of 2022.

At the start of 2019, prime real estate in Melbourne’s CBD commanded $480 per sq m, dropping three per cent for the same period in 2020.

Rents further declined by 12 per cent at the start of 2021 to $404sq m, and a three per cent fall is expected by the end of this year, according to the CBRE research.


▲ Vacancy rates are poised to hit short of 12 per cent by the final quarter of 2021, a 45 per cent rise from January this year. 

JLL head of research Andrew Ballantyne said that while the numbers remain negative, there’s been green shoots amid the “re-establishment” of the market.

“We are now seeing inquiries and activity picking up from smaller users particularly organisations within the 500 to 600 sq m space.”

The Victorian head of CBRE’s office occupier team Angelo Pavenello suggests leasing in the 600sq m size range is not as popular with tenants compared to larger 1,000sq m spaces.

Spaces with packaged fit-outs remain top of the leaderboard—encouraging landlords to consider upgrading their office spaces to avoid high incentives in the long term.

Recent JLL research suggests the future of workplaces will need to become employee-led, introducing informal spaces in the office environment to enhance peak performance.

Outdoor terraces, on-site cafes, and social break-out areas are some of these which will make work feel more like home.

“As companies look to invest more in supporting hybrid teams, building owners have a great opportunity now to refresh their assets and develop more holistic programming of spaces, and sustainable lifestyle offering to occupiers,” JLL workplace strategy director Sonya Alexander said.

On the journey to recovery, businesses have progressed with completing internal space reviews and implementing strategies to steer employees back to work.


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Why the Sunshine Coast office market is one of the strongest in Australia

As office vacancy rates shot up drastically in capital cities last year, a different story was unfolding on the Sunshine Coast.

A glut of buildings on the market was steadily absorbed, and new A-grade projects were quickly filling with tenants. As vacancy rates dropped from a high of 22 per cent in 2019 to just 13 per cent in January this year, according to figures from the Property Council, the Sunny Coast became the hottest office market in Queensland.

Herron Todd White’s Chris McKillop said the market had been steadily improving for a number of years. “It’s quite buoyant, and it’s been ticking along well,” he said. “And then the last 12 to 18 months has gone ballistic.”

In the property valuations firm’s latest report, the Sunshine Coast is designated as the country’s only office market approaching its peak. Notably, the areas considered “rising office markets” were in the regional areas of Byron Bay, Lismore and Ballina.

While the pandemic and remote working arrangements have thrown much of the nation’s office market into unchartered territory, in many areas demand for office space is far from subdued.

“You look around the Sunshine Coast and in some respects, it’s like COVID has never happened,” Mr McKillop said.

The expansion of the medical sector around the Sunshine Coast University Hospital was partly driving the uptake of office space, he said. “And the Sunny Coast has one of the highest levels of start-up businesses in the country. There’s a lot of incubators.”

The new Maroochydore City Centre is slated to deliver 160,000 square metres of commercial and retail space over the next 15 years, with Walker Corporation recently signing a $2.5 billion development agreement.

Sunshine Coast

Foundation Place was the first commercial project to open in Maroochydore’s new city centre. 

The success of Foundation Place, the first commercial project to open in the new city centre, has boosted confidence in the local office market.

The five-storey office building developed by Evans Long was fully leased within months of completion.

Transact Property Group director Mark Dann said he was now dealing with enquiries for A1, the developer’s next proposed retail and office project in the Maroochydore CBD.

“The enquiry has certainly been very strong and we attribute that to the success of Foundation Place,” Mr Dann said. “It’s given local businesses and the commercial market a lot more confidence.”

Foundation Place was bought by fund manager Primewest for a rumoured $30 million at the start of the year.

Mr Dann said the shift away from major eastern seaboard cities since the pandemic began had boosted the local office market.

“People moved up and said, ‘I can work from home’ … but after a certain period of working at home, it’s probably not ideal so they’ve gone out looking for space.”

Mr Dann said his agency was having difficulty finding small office spaces between 50 and 120 square metres for tenants. “And there’s honestly not a lot available. Two years ago, there would have been pages and pages of listings.”

He noted a “flight to quality” as new office projects with more facilities were coming onto the market or in the pipeline.

Despite the drop in vacancy, net rental levels have remained stable over the past two years.

“It’s still affordable. There’s A-Grade space for $450 per square metre,” Herron Todd White’s Chris McKillop said, adding that the spaces often included parking and a view.

He expected the new Maroochydore precinct to continue to attract businesses from across the Sunshine Coast.

“Our vacant space is all the older stock that was built 15 or 20 years ago, and is probably in mixed-use locations.”


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