Investment in Brisbane Fringe Office Market Tops $1bn - Queensland Property Investor
Connect with us

Brisbane

Investment in Brisbane Fringe Office Market Tops $1bn

Investment in Brisbane Fringe Office Market Tops $1bn

Vacancy is falling and rents are lifting in Brisbane’s fringe office market amid jobs growth and a turnaround in tenant activity resulting in tightening supply.

After a number of years of relatively poor market conditions, the fringe office leasing market is now back on track with strengthening rents and lower vacancies, with engineering, IT and property businesses dominating leasing activity.

According to commercial real estate agency Knight Frank prime effective rents grew by 8.2 per cent in the year to April 2019 with the absence of any major new supply for the following 12 months will allow vacancy to fall to 11.2 per cent by mid-2020.

The inner-south office precinct remains as the tightest office market in the region with vacancy rates of 10 per cent, with the forecast supply holding steady over the next 12 to 24 months with limited near-term supply on the horizon.

Investment in Brisbane Fringe Office Market Tops $1bn 1

“Effective rental growth of 4 per cent per year on average is expected over the next two years as conditions improve,” Knight Frank partner office leasing Shane Van Beest said.

Queensland and Brisbane’s economic growth is now set to outperform the southern states due to population growth, infrastructure investment and exposure to export industries.

“This will result in employment growth, which will assist to accelerate rental demand in the fringe office market, with Brisbane employment within core office industries estimated to grow by 5.73 per cent during the 2018-19 financial year,” Van Beest said.

“Public administration and professional, scientific and technical services expected to have the greatest growth.”

Investment in Brisbane Fringe Office Market Tops $1bn 2

Van Beest said net absorption in the Brisbane fringe office market over the first half of 2019 is forecast to be double the levels seen in the second half of 2018 at 24,500 square metres.

“On the ground, the market feels a lot tighter than the figures actually suggest with strong tenant enquiry and activity.”

“Already contiguous space over 4,000 or 5,000sq m is very hard to find in the near city which is a sign that the market could tighten up quicker than most people expect.”

“There has been steady take-up throughout the year with tenants new to the market a welcome boost.”

Tenants such as WSP, Southern Cross Media, DXC, Downer Defence, Ladbrokes and CPB Consortium have taken up space; these were either new to the fringe or consolidations from other precincts.

Record investment in Brisbane’s fringes

Knight Frank head of commercial sales Christian Sandstrom said there was record investment in Brisbane’s fringe office market, reflecting the greater interest in Brisbane as an investment destination.

“In the 2019 financial year transactions totalled $1.048 billion, and a number of further sales are likely to complete prior to the end of the financial year,” Sandstrom said

“The dominance of purchasing activity by domestic funds has continued in the 2019 financial year, with $805.1 million of transactions in the year to date.”

Offshore funds accounted for 42 per cent of purchasing activity in both the 2017 and 2018 financial years, the activity of major domestic listed and unlisted funds has restricted this to 26 per cent in the current financial year.

Fringe prime yields continued to tighten, down a further 35 basis points over the past year and remained firmly on a tightening cycle, with median yields down 35 basis points over the past year and 260 basis points in this cycle.

 

 

Source: theurbandeveloper.com

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Brisbane

Brisbane rents: Landlords in ‘rosier position’ as unit oversupply eases

Brisbane rents Landlords in ‘rosier position’ as unit oversupply eases

Brisbane rents are creeping up and the proportion of vacant homes is inching down, as the city’s rental market recovers from years of oversupply, experts say.

Asking rents for units rose 1.3 per cent to a median $380 a week over the past year, the latest figures from the Domain Rental Report for the September quarter show.

House rents also edged up 1.3 per cent to a median $405 over the same time period, according to the report released on Thursday.

The combined vacancy rate fell 0.1 percentage points to 2.2 per cent during the September quarter.

It comes after a wave of new apartments were built in Brisbane’s inner city in recent years, with the extra supply keeping a lid on rents.

Domain research analyst Eliza Owen said the market was now in good health, despite appearing to be near-stagnant.

Median weekly asking rents for units
REGIONSEP-19JUN-19SEP-18QOQ % ∆YOY % ∆
Brisbane – City wide$380$380$3750.0%1.3%
Brisbane – East$405$405$4000.0%1.3%
Brisbane – North$370$365$3631.4%2.1%
Brisbane – South$385$380$3751.3%2.7%
Brisbane – West$400$415$390-3.6%2.6%
Brisbane Inner City$420$425$410-1.2%2.4%
Ipswich$295$295$2960.0%-0.3%
Logan$300$300$3000.0%0.0%
Moreton Bay – North$315$315$3100.0%1.6%
Moreton Bay – South$340$335$3351.5%1.5%

For units, the stability was a positive story compared to oversupply-induced market weakness a few years back, Ms Owen said.

“There’s been a lot of fear about over-development but in the building space there’s been tightening of dwelling completions,” she said. “They’ve come down sharply and are returning to long-run average levels.”

Rents were now trending up and vacancy rates down, she said.

“The picture for south-east Queensland in terms of rental returns is pretty good, it’s also one of the most affordable rental markets for houses.”

Ms Owen said interstate migration, mostly from Sydney, was a major factor in keeping the rental market balanced.

“The tightening of the rental market is off the back of strong population growth and a very affordable lifestyle, and this is reflected in the rental vacancy rate which is down to 2.2 per cent from 2.6 in the previous year,” she said.

Median weekly asking rents for houses
REGIONSEP-19JUN-19SEP-18QOQ % ∆YOY % ∆
Brisbane – City wide$405$400$4001.3%1.3%
Brisbane – East$450$450$4500.0%0.0%
Brisbane – North$435$435$4300.0%1.2%
Brisbane – South$435$435$4400.0%-1.1%
Brisbane – West$490$485$4801.0%2.1%
Brisbane Inner City$550$530$5203.8%5.8%
Ipswich$350$350$3500.0%0.0%
Logan$365$360$3651.4%0.0%
Moreton Bay – North$375$370$3651.4%2.7%
Moreton Bay – South$410$413$410-0.6%0.0%

Space Property projects director Adam Gray said the unit market was threatening to tip into under-supply for sales, which could have a flow-on effect to the rental market.

“There’s a few reasons, one of the main reasons we’re not putting as much supply in,” he said. “There’s certainly a lot less cranes, and apartments being built than there once was.

“A lot of that was happening in the inner city and now rents are rising and rental vacancy rates are dropping.”

Ray White Brisbane CBD principal Dean Yesberg did not think a looming under-supply was something to worry about yet.

“No, definitely not,” he said. “We’ve got enough supply coming through to cater.”

The bulk of rentals were being filled because of new employment opportunities in the Queensland capital, said Mr Yesberg.

“The mining industry are getting into a better situation and that’s seen an increase in families coming to Brisbane, well qualified people coming up here for jobs,” he said.

“The coal mining people are getting into full swing, then there’s a lot of infrastructure going into Brisbane right now – the Cross River Rail and Queens Wharf casino, [for example].”

Median weekly rents – houses

CAPITAL CITYMEDIAN WEEKLY RENTQOQYOY
Sydney$525-0.9%-4.5%
Melbourne$4300.0%0.0%
Brisbane$4051.3%1.3%
Adelaide$3850.0%2.7%
Perth$3701.4%5.7%
Canberra$5500.0%0.0%
Darwin$4901.0%-2.0%
Hobart$4500.0%9.8%

Urbis director of property economics and research Paul Riga said young people were continuing to drive the rental market, particularly for units in the inner city.

“There’s a bit of a mix, when we look at the building manager feedback, the Gen Y demographic is driving that market,” he said.

“They’re here for employment and maybe from Sydney so their first port of call won’t be to buy, it will be to rent.

“It’s not a majority but it’s just grown in proportion. Some of our building managers are suggesting up to 20 per cent of their rental inquiry is coming from interstate.

“It’s a rosier position if you’re a landlord, definitely.”

Median weekly rents – units

CAPITAL CITYMEDIAN WEEKLY RENTQOQYOY
Sydney$520-1.0%-4.6%
Melbourne$4200.0%2.4%
Brisbane$3800.0%1.3%
Adelaide$3101.6%3.3%
Perth$3100.0%3.3%
Canberra$4700.0%4.4%
Darwin$380-1.3%-5.0%
Hobart$3953.9%12.9%

 

 

Source: www.domain.com.au

Continue Reading

Brisbane

Investec Lists Fortitude Valley Office Tower

Investec Lists Fortitude Valley Office Tower

The newly-listed Investec Australia Property Fund will divest its 11-storey Fortitude Valley office building with an expected price north of $90 million as it moves to recycle capital.

Fresh off the heels of its fully underwritten institutional placement and purchase of three industrial properties in the Northern Territory, Western Australia and South Australia for $84 million last month, Investec has motioned to sell its Brisbane, 757 Ann Street, tower.

Investec purchasted the Nettleton Tribe-designed tower for 68.5 million after it was completed in 2014.

Comprising 9,422sq m of office space with a weighted average lease expiry of approximately five years, the A-grade building, anchored by technology company Asea Brown Boveri, is 100 per cent leased.

Investec Lists Fortitude Valley Office Tower 1

Cushman & Wakefield’s Mike Walsh and Peter Court are managing the international expression of interest campaign, to kick off mid-October, with expectations it will generate strong interest from domestic and off-shore institutions, funds and syndication groups.

“The entire commercial component of the asset is structured on a net lease basis, providing smooth, predictable cash flow for investors,” Court said.

Sales over the first half of the year surpassed the total volume of sales over 2018—reaching $1.2 billion, according to Colliers research, with Australian institutional investors dominating the lion share of transactions.

Commercial assets currently on the market include Perth-based investor RG Property’s 410 Queen Street in Brisbane’s ‘golden triangle’.

Recent Brisbane assets changing hands include the sale of the Jubilee Place Office development at nearby 470 St Pauls Terrace to a real estate fund managed by Credit Suisse, Malaysian-backed HCK’s 116 Adelaide street for $30 million, and QIC’s Q&A Centre at 141 Queen Street and 140 Elizabeth Street which sold to Taiwanese developer Shayher Group.

As for development plans in the Fortitude Valley precinct, Sydney fund manager Millinium Capital in August announced plans for a new university campus and 30-storey tower that would comprise student accomodation, co-living and co-working space at 240 Brunswick Street and 11 Overells Lane.

 

 

 

Source: theurbandeveloper.com

Continue Reading

Brisbane

Australian property management startup raises $3.5 million, expands to Brisbane

Australian property management startup raises $3.5 million, expands to Brisbane

Australian proptech startup :Different has announced it raised $3.5 million in its latest funding round to continue its national expansion.

The fund raising coincides with the company’s launch into Brisbane today.

:Different is a full-service property management startup where property owners pay a fixed fee of $100 per month instead of a percentage based on the rental price of the property.

The appeal of :Different is their tech base which automates the everyday tasks of a property manager.

:Different’s owner app provides 24/7 access to documents like lease agreements, statements, and maintenance requests, while the tenant app helps streamline requests and fast track communications.

Over the last 12 months, :Different’s customer base has grown five folds with more than $700 million worth of properties now under management across New South Wales and Victoria, while its team has quadrupled to 32.

The latest funding round supports :Different’s ambitions to expand into new markets, further enhance its tech platform and continue to build its team of expert property managers, said Mina Radhakrishnan, Co-Founder at :Different.   

“We’ve already had huge success since launching in Sydney and Melbourne, and we’re thrilled to offer the same great offering to Queenslanders,” Radhakrishnan said.

“We have big growth ambitions for :Different. This latest funding round will help us continue to rebuild property management in Australia and beyond.”

Source: www.propertyobserver.com.au

Continue Reading

Positive Cashflow Property

duplex designs, dual occupancy homes

Property Investment Advice

Trending