Perth office market is bouncing back

July, 2017 by

In its June 2017 Office Market Report, Investa says the Perth CBD office market is finally emerging from its longest cyclical downturn since the early 1990s.

Following five-years of deteriorating market conditions, leading indicators of market activity now present a moderately optimistic outlook for the Perth office market in the coming years, according to the report. These factors include increasing net absorption of CBD office space coupled with low levels of new development for at least five years. Investa also expects Perth CBD office vacancy rates to gradually decline in the coming years.

Anthony Vulinovich, Director, Raine & Horne Commercial WA agrees this is good news for the Perth market. “I would say that it’s a tipping point whereby we are seeing the market stabilise with most tenants past the point of vacating the Perth market, or similarly downsizing their space requirements. So, the net effect is that we are not seeing vacancies increase.”

The market will stabilise now in terms of vacancy levels, noted Anthony. “Over time vacancy levels will decrease given new construction will be capped and its likely older unlettable space will be taken off the market and either refurbished or remodeled for residential or other uses,” he said. “The flight to quality will remain for great space at great rates – but vacancy rates for older stock will continue to grow and be a challenge for investors who hold it.”

REA Economist tips good times for industrial warehousing

July, 2017 by

Thanks to technological disruption, the golden child of commercial property is industrial warehousing, according to REA Chief Economist Nerida Conisbee.

“If you want to be in the best position long term then this is the asset class you should be looking at,” said Nerida in a news piece for realcommercial.com.au, a sponsor of Raine & Horne Commercial’s Insights publication.

Nerida suggests that there are number of factors that will underpin demand for industrial warehousing. “Amazon will need a lot of warehousing if it hopes to achieve the same market share in Australia as it does in the US.

“All those driverless cars will need to be stored somewhere and it is likely some sort of centralised warehousing will emerge where they can be refuelled (or recharged), as well as get appropriate maintenance.”

Working remotely will continue to drive the need for cloud storage and data centres — creating even more demand for warehouses.

Excellent time for business expansion in Brisbane says Raine & Horne commercial

July, 2017 by

Whether you’re looking to buy or lease bigger premises in Brisbane, there’s never been a better time, says Joseph Grasso, Co-Principal of Raine & Horne Commercial Southside.

“Despite the banks being forced to hike up interest rates to meet APRA lending requirements and more latterly the Federal Government’s bank tax, we still have low interest rates and therefore relatively cheap money for businesses seeking to own their own commercial space,” said Joseph. “On the leasing front, we also have plenty of listings in the 2,000-5,000 square metre range if you’re looking for more space for your growing business.”

To illustrate, Raine & Horne Commercial Southside has 4/576 Boundary Road, Archerfield for lease, which is part of new tilt panel 8 unit complex. It is a 1,992 square metre unit with excellent internal height of up to 10 metres, a warehouse that is accessed via a 3 × 6 metre high electric roller doors. It has excellent onsite car parking areas and truck manoeuvrability, as well as a 5 metre wide awning for all weather loading and unloading over the roller doors. The unit also offers high quality A-Grade office accommodation over 2 levels. “Any tenants who are looking to lease space in the 2,000-5,000 metres range in Brisbane’s south, there is a good opportunity to take advantage of volumes that currently exist in the market. These volumes weren’t available 2 years ago,” said Joseph. “If you’re having problems getting some finance from your bank, give them the flick, and lease a location.”

Private buyer acquires North Melbourne warehouse for $8.25M

July, 2017 by

A private buyer has acquired a vacant 2137-square-metre office/warehouse in North Melbourne for $8.25 million in an off-market transaction, according to commercialrealestate.com.au

The new owner will occupy the property at 56-92 Langford Street, which sits on a 3362-square-metre site. Raine & Horne Commercial Victoria’s Francis Sbaglia brokered the deal in conjunction with another agent.

Demand picks up for commercial space in NSW second biggest city

July, 2017 by

The NSW Government is building a light rail system for the Newcastle CBD, however NSW’s second largest city will continue to be a car-reliant economy, says Steve Dick, Director, Raine & Horne Commercial Newcastle.

“The city’s public transport network is ineffective at providing timely and cost-efficient commuter solutions and the 2 kilometre tram track along Hunter Street is a financial folly causing massive disruption for no benefit,” said Steve. “However, property on the fringe of the Newcastle CBD is enjoying strong rental growth as more and more property is absorbed tightening the supply with a growing demand from businesses pushed to the fringe by the disruption.”

Most investments in Newcastle are to be found in the sub-$2 million market, and vacancy rates, according to the 2017 Raine & Horne Commercial Industrial Average, start from 2.0% in locations such as Wickham – although across the city, an average vacancy rate of 6.3% applies.

Self-managed super funds are driving the owner occupier market in the industrial and commercial sectors in the sub-$2 million market. “There is an unusual situation occurring because of self-managed superfunds,” said Steve. “Nowadays, vacant owner-occupier buildings are achieving higher values than if they were leased.

“This is despite the record low yields being paid on income producing investment property.” Newcastle’s increased spending on infrastructure and apartment complexes plus the near completion of the University of Newcastle’s law and business faculty building is making the CBD a growth market despite the disruption, noted Steve.

Super funds fuel Logan property

July, 2017 by

Self-managed super funds are fuelling Logan city’s commercial property market, according to a recent report in Brisbane’s Courier Mail.

The Courier Mail cited Raine & Horne Commercial’s May Commercial Insights report that found the Logan city market was being driven by low interest rates, demand from self-managed super funds, overseas investors and business owners looking to purchase their premises.

Raine & Horne Commercial Beenleigh’s John Tamblyn said industrial property dominated the local commercial market. He said in contrast, most retail property was held as multi-tenanted buildings and not as individual strata.

He said there was a shortage of industrial land in Beenleigh with a limited supply of freestanding industrial properties coming on to the market. “This type of property is enjoying strong demand among owner occupiers, investors and tenants alike,” he said.

The majority (66%) of buyers in Beenleigh are investors, and self-managed super funds were active participants in the $200,000-$1 million price range. Fund trustees are typically looking for yields in the order of 8-9%.

Surfers Paradise retail icon sells for $22 million

July, 2017 by

The Surfers Paradise commercial landmark, Piazza on the Boulevard, has been sold to a local investor for $22 million, said selling agent Michael Parisi, Director, Raine & Horne Commercial Gold Coast.

“We sold the complex for Sydney-based Balmain Group, who is acting on behalf of owner Goldman Sachs in New York,” said Michael.

Located in the heart of Surfers Paradise, Piazza on the Boulevard is a two-level building with frontages to Surfers Paradise Boulevard and Elkhorn Avenue. The centre is a short stroll to the famous Surfers Paradise Beach and the entertainment hub, Cavill Mall. It also conveniently located adjacent to the G:link, the new light rail system that serves the Gold Coast.

Piazza on the Boulevard offers 8,900 square metres of lettable retail and commercial space and it currently boasts a mix of takeaway food outlets, restaurants, a medical centre, a pharmacy, dental surgery and pathology firm, noted Michael. “The property has some vacancies, so there is significant potential for retailers and commercial firms, and we are in negotiations with some interested parties seeking to move into the complex,” he said.

Piazza on the Boulevard was originally built in 1984 and underwent a refurbishment in 1999, which included a new awning and the establishment of an additional entrance on the ground floor. A $2 million upgrade of the shopping arcade was completed in 2002.

Infrastructure drives buoyant commercial property markets across Australia

May, 2017 by

Independent analysis by Raine & Horne Commercial, confirms Australia’s commercial property market is experiencing boom conditions.

Raine & Horne Commercial Insights was released in April and provides a deep dive into commercial real estate markets across Australia, with commentary from some of the firm’s leading local area experts.

Angus Raine, Executive Chairman, Raine & Horne told Transport and Logistics News that: “High sales volumes are being driven by low interest rates coupled with intensifying demand from self-managed super funds, overseas investors and business owners looking to purchase their premises.

Market conditions are most buoyant in those areas where major infrastructure projects are either underway or completed. “The wealth of infrastructure developments across many parts of the country is having a major impact on commercial property values, yields and vacancy rates. In conjunction with historically low lending rates and incoming changes to superannuation, interest in commercial properties is coming from a range of investors – both local and offshore, as well as small to medium businesses seizing opportunities to own their premise,” said Angus.

“The detailed analysis of Raine & Horne’s commercial property experts across Australia makes our Commercial Insights Report a rich source of information on the state of metropolitan and regional commercial markets nationally. It is a valuable resource for self-managed super funds, business owners and investors seeking healthy yields in a low return environment.

Viva Energy REIT pumps up $10.8 million for a Shell service station in Annerley

May, 2017 by

Viva Energy’s real estate arm has snapped up a newly built service station in Brisbane’s south to add to its expanding portfolio, according to the firm’s 2016 annual report.

Viva Energy REIT paid $10.8 million for the Coles Express at 338 Ipswich Rd, Annerley, in a deal struck by Raine & Horne Commercial Brisbane Southside’s Associate Director Paul Flego.

The property is located on Ipswich Road, a major Brisbane arterial road, within the Princess Alexandria Hospital precinct. There is a new 15-year triple net lease with 4 X 5 option with Viva Energy Australia and 3% annual rent increases, according to the annual report.

“We received so many inquiries from NSW, Victoria and Queensland made up mostly of wealthy individuals and syndicates,” said Paul told Brisbane’s Courier Mail. “But Viva REIT made the offer a day before the auction which was accepted.” The sale realised a yield of 5.31%.

Last year Paul sold the almost vacant 2,463 square metre outbound site where the new Coles Express service station now sits. The site was previously owned and occupied by Clements Cars and 4WD, and Paul sold it to a local developer off-market for $3.75 million plus GST. “The dual sales attest to Paul’s excellent planning, strategic sales skills and vision,” said Angus Raine, Executive Chairman, Raine & Horne Group.

Sale and leaseback win

May, 2017 by

Bay Gallery Furniture has sold its Penrith warehouse in Sydney’s west under the hammer for $3.417 million on a five-year sale and leaseback with options, according to Australian Financial Review.

Raine & Horne Commercial Penrith’s Keiran McGarity negotiated the auction sale of the 58 Leland Street warehouse.

The 2179 square metre property sold on a yield of 6.29%, according to Keiran, based on annual passing income of $215,000. Bay Gallery is paying all outgoings and has recently signed a new 5 + 5-year lease. The 4013 square metre site includes a concrete yard area ideal for storage and large vehicles.

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