After a widespread national lockdown in early 2020, Covid-19 has had a varied and fragmented impact on Australia’s commercial property market, with restriction levels varying dramatically between states.
Throughout such a volatile time, innovation and adaptation have emerged as key pillars of success for businesses within these commercial property sectors, according to Re-Leased, a cloud-based property management software solution for commercial, industrial, office, retail and mixed assets.
With the external environment shifting daily, landlords who had the upper hand were those armed with real-time data that gave them a clear picture of the market.
While the commercial real estate sector has traditionally been slow in the uptake of real-time data to guide their business decision-making, property professionals are beginning to realise that this information is a powerful tool to gain a competitive advantage.
During the past few years, the changing needs of tenants have been prominently exposed in the office sector.
A growing number of office workers no longer wish to work in an office full-time, which has increased the demand for flexible workspaces, shorter lease terms and tech-enabled fit-outs.
This trend was accelerated dramatically during 2020, as businesses were forced to set up the infrastructure that allowed their employees to work efficiently from their homes.
As tenant’s found it more difficult to access their premises, rent-collection rates fell across Australia and rent-relief subsidies increased as landlords tried to keep them on board.
While rent collection is just now returning to pre-Covid-19 levels, a longer-term trend that we are likely to observe is the demand for shorter lease terms.
Tenants are taking with them the lessons from 2020, pursuing greater flexibility and protection for their business.
Securing long-term leases of 10-plus years has traditionally been a key indicator of success for property professionals across Australia. However, these investors will now have to reconsider how they evaluate the performance of their property portfolios and pivot their product offerings.
Co-working spaces are a great example of how demand for shorter lease terms is changing the market for office landlords.
Initially, this business model was hit hard, as tenants took advantage of their short leases and dropped their flexible workspaces as soon as Covid-19 hit.
However, it is this same model that is best set up to offer businesses more flexible leases in the future and meet this growing demand.
More established commercial landlords will have the right amenities and assets in place to offer flexible lease terms to larger companies, which will see them grow in popularity.
An industry that has performed consistently well during Covid-19 has been Australia’s growing industrial sector. Industrial property is currently undergoing a phase of unprecedented expansion and digital transformation, driven by the rise of e-commerce.
This growth was accelerated by online shopping demand throughout 2020, as shoppers were restricted from attending brick-and-mortar retail stores.
As industrial assets become increasingly high-tech and integrate artificial intelligence to optimise manufacturing capability, these opportunities will only expand further.
In 2021 and beyond, industrial assets are likely to rise in value and attract investment from landlords looking to diversify their portfolio.
This means that harnessing real-time data has never been so important for industrial property landlords, to keep up with this rapidly transforming landscape.
It is clear that as Australia rebounds from the events of 2020, the commercial property professionals who will prosper in our new normal will be those who are flexible and agile in their approach, and those who choose to arm themselves with the data-driven tools necessary to make informed and strategic decisions.
Article Source: www.theurbandeveloper.com
Aria offer over 1,100 sqm of resort-style amenity at Trellis, South Brisbane apartments
The ground-level homes the Temple of Wellness, designed to be in-keeping with the lush foliage throughout the development
The award-winning Queensland developer, Aria Property Group, are taking the resident amenity to the next level in the latest South Brisbane apartment development, Trellis.
They’re offering residents offer 1,100 sqm of facilities scattered throughout the 13-level, Rothelowman-designed development, crowned by the most impressive amenity of all, the Residents’ Rooftop Club.
That will feature an infinity pool with views across Brisbane, a hot & cold magnesium bath, a lounge, public barbecue areas, and a private dining room.
The ground-level homes the Temple of Wellness, designed to be in-keeping with the lush foliage throughout the development.
A series of gardens line the path to the Temple of Wellness, where residents will walk through the cascading waterfall to a fully equipped fitness centre and meditation zone, home to weights, pilates reformers, cardiovascular equipment and meditation pods.
Aria Living also offers complimentary group yoga and group personal training fortnightly.
Residents at Trellis will also have access to a podcast/boardroom, serving as a multi-use space for working at home. There’s also a Residents’ Wine Cellar.
Apartments in Trellis start from $739,000 for an apartment with two bedrooms and two bathrooms. Three-bedroom apartments are priced from $1,084,000.
Completion is slated for mid-2023.
Article Source: www.urban.com.au
Fed up home buyers take plunge into commercial property
A young woman in her 20s recently snapped up her first property – it was a ground floor shop leased to a jewellery business in South Melbourne.
The buyer, who declined to be identified, paid $900,000 and will earn income equivalent to a 5 per cent yield for her efforts.
Another first-time commercial buyer, Mark Murray, was priced out of the residential market for the type of property he was looking for and instead opted for a two-storey shop in High Street Northcote, in Melbourne’s inner north.
“This is my first property. I want to lease out some of the spaces,” he said.
Both buyers are part of a growing cohort looking at entry-level commercial properties as an alternative to the well trodden path of homeownership.
Sky high residential values – Melbourne’s house prices were up 15 per cent year-on-year in September – and changes to Victoria’s residential rental laws are pushing some would-be owners to look at alternatives.
Buyers are finding that the returns on residential real estate are so poor – with yields in the range of 1 or 2 per cent – that they prefer to buy something that will give them 3 to 5 per cent, which is commercial property.
Barry Novy from Gross Waddell ICR
The state’s new tenancy laws, introduced in March, have put a fresh onus on residential landlords: banning rental bidding, introducing minimum rental standards, changing eviction rules, and allowing modification of homes by renters – all of which has sharpened the difference with commercial property, real estate agents say.
Mr Murray said he planned to live in the upstairs section of his High Street property and turn the downstairs into artists’ workspaces and a recording studio. The shopfront, next to Sweet Life Tattoo, sold through Fitzroys’ Ervin Niyaz.
Mr Murray said it was a privilege to be able to buy something and share it with the creative community. “I’ll definitely earn an income but probably not as high rent as other places.”
The overheated housing market and superior rental returns are driving people towards commercial real estate, Stonebridge Property Group’s Dylan Kilner said.
The Dorcas Street building that sold in South Melbourne has a three-year lease to Unique Diamonds with fixed 3 per cent annual increases. Its outgoing expenses are also paid by the business tenant.
By contrast, residential leases are usually limited to one-year and have no set increases in rent with landlords required to pay outgoing expenses like extra water charges, taxes and maintenance costs.
“The buyer was a first-time investor who opted for an entry level commercial investment rather than a residential property,” Mr Kilner said.
Gross Waddell ICR’s Barry Novy said buyers should do their homework before taking the plunge into commercial property because of differences between the property classes.
“Buyers are finding that the returns on residential real estate are so poor – with yields in the range of 1 or 2 per cent – that they prefer to buy something that will give them 3 to 5 per cent, which is commercial property,” he said.
However, commercial property has a greater risk of long periods of vacancy, depending on market conditions. “You’ve got to be able to cover that,” he said.
Leasing contracts in the sector are also more complicated to negotiate and administer.
“There is also a misconception that if you buy commercial property you have less maintenance. That may or may not be true.”
Article Source: www.brisbanetimes.com.au
Landmark Brisbane Hotel Sells for $50 Million
A Sydney-based hospitality group has swooped on a landmark riverside Brisbane hotel at the northern end of the city’s iconic Story Bridge.
Oscars Hotel Group—owned and operated by brothers Bill and Mario Gravanis—has paid $50 million for the Oakwood Hotel and Apartments.
The 11-storey accommodation asset, on a prominent 2966sq m corner site at 15 Ivory Lane, has been offloaded by Singapore’s Mapletree Investments, which purchased it in 2015 for $48 million.
Formerly the Adina Brisbane Hotel, its sits above the Howard Smith Wharves precinct and Crystalbrook Vincent Hotel—originally The Fantauzzo—that was purchased last year by Syrian billionaire Ghassan Aboud in a $70-million-plus deal.
The four-star Oakwood Hotel and Apartments comprises 162 suites, a bistro, business centre, gym and pool but its new owners are expected to undertake a major revamp to capitalise on its prime location within the popular riverside precinct.
Its latest change-of-hands adds momentum to the rising wave of southern property players seeking geographic diversification due to the impact of Covid-19 lockdowns in New South Wales and Victoria.
Industry experts predict the flow of capital into Queensland’s property sector will continue its groundswell over coming years in the lead-up to the 2032 Brisbane Olympics.
The Gravanis brothers—known as Sydney’s kings of hospitality with a portfolio of more than 30 venues across NSW—made their big move into Queensland in May, snapping up Long Island in the Whitsundays for circa $20 million.
They are planning a new resort project for the island off Airlie Beach.
Oscars Hotel Group was established in 1986 with the acquisition of a single pub in Sydney’s inner-west.
Its purchases of Brisbane’s Oakwood Hotel and Apartments and Whitsunday’s Long Island are part of a strategic expansion to gain northern exposure in the tourism and hospitality sector.
CBRE Hotel’s national director Wayne Bunz negotiated the deal.
Article Source: www.theurbandeveloper.com
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