C ommercial BY RAY WHITE AKG
THE DEAL MAGAZINE FEBRUARY 2022
CONTENTS 3
CURRENT CLIMATE OF THE INDUSTRIAL, OFFICE, RESIDENTIAL AND RETAIL MARKETS WITH ANGUS PAGE AND JAMIE DAVEY
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LEASING NOW (FEATURED PROPERTIES)
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SELLING NOW (FEATURED PROPERTIES)
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JUST LEASED (FEATURED PROPERTIES)
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JUST SOLD (FEATURED PROPERTY)
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MYTHBUSTERS - COMMERCIAL PROPERTY EDITION WITH THE RAY WHITE ECONOMICS TEAM
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KNOW THE TEAM
Current Climate of the Industrial, Office, Residential and Retail Markets by Angus Page & Jamie Davey
Introduction The effects of the COVID-19 global pandemic has dramatically impacted the Australian property industry. Each sector of the industry has reacted in its own way. We take a look at the current climate of the industrial, office, residential and retail markets. Industrial The high levels of demand to occupy, invest or lease premium industrial property has continued into 2022. Investor demand and strong rental growth is expected to continue throughout 2022, underpinned by supply constraints, low vacancy rates, and the further expansion of e-commerce. Investors are continuing to enter the market and anything with a lease in place is considered very desirable. This is continuing to compress yields and inflate the capital value of industrial assets across Australia. Online retail continues to be a major player in driving up occupier demand, as many companies try to source larger distribution and logistics facilities. Vacancy rates in South East Queensland are approximately 2% which is making it extremely difficult for many tenants to secure any space that will suit their requirements. Many businesses are experiencing growing pains and are in need of larger facilities that are not readily available in the market place. This has created high levels of competition between tenants and inflated net rents. Office Interest in the commercial office leasing sector throughout the Logan region started strong in 2022. We have seen a large increase in enquiry for all types of commercial office properties ranging from large corporate facilities to smaller professional office suites. Since the beginning of January, we have successfully negotiated lease agreements for office space worth over $270,000 per annum, with more requirements yet to be filled.
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Although this is a great start and shows that the office market is slowly beginning to recover, it will still be a while before rental rates rise and vacancy rates decrease to the level they were prior to the COVID-19 pandemic. Office sales are still moving forward at a steady pace, with owner occupiers and investors taking advantage of the low interest rates. Yields for high quality office assets have tightened, but are still sitting at a level higher than other office markets around Australia. If this trend continues, office vacancy rates will decrease, which will in turn allow the rental rates to increase to match demand. Residential It is no secret the residential property market has been a huge beneficiary of the Covid-19 pandemic. In fact, the average house price in Brisbane has increased by 23.3% in the last 12 months. The Brisbane market is set to continue to surge throughout 2022, with other state capitals such as Sydney and Melbourne predicted to stabilise. Brisbane is expected to have the highest growth of all the capitals in 2022. However, prices are expected to rise at a slower rate than in 2021. Further interstate migration and investor demand is set to be the driving force behind this continued strong buyer demand. Property prices in Brisbane are predicted to rise in the long term as well, primarily driven by securement of the 2032 Olympics and the increased infrastructure associated with it. Increased infrastructure will create more jobs and population growth, and result in more interstate migration and demand for housing in Brisbane. Retail Whilst there has been an increase in commercial office activity over the past month, the retail leasing market is still yet to gain much traction. The enquiry levels are increasing, but due to an excessive amount of retail options available it is difficult for owners to secure long term tenants. Retail vacancy levels are expected to decline with the easing of restrictions and the opening of borders. However, the effects of COVID-19 have impacted the retail market greatly and it will take a while before the rental rates and occupancy rates resemble any type of regularity.
Summary The demand to occupy industrial properties in South East Queensland continues to put pressure on low supply levels across Queensland. Similarly, there is demand to purchase office assets with strong lease covenants and there seems to be a renewed interest in the leasing market as well. Residential property prices in Brisbane are expected to continue to rise throughout 2022 but at a slower rate than in 2021. The retail market was the hardest hit by the effects of COVID-19 and lockdowns. The long term outlook for the industry is positive but it is going to take some time to recover.
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LEASING NOW
FEATURED PROPERTIES THIS MONTH OFFICE 25 Barklya Place MARSDEN Price Upon Application
Building: 205sqm Land: 304sqm
Well Presented Ground Floor Office Suite With Ample Parking - 205m²* Great fit-out in place comprising of open plan, partitioned offices and meeting/boardrooms Generous entry reception area with great natural lighting Secure server room with independent air conditioning Current office furniture can be included at no additional cost Ducted air conditioning throughout
JAMIE DAVEY 0400 763 772
INDUSTRIAL 50/8 Distribution Court ARUNDEL
$49,600 Per Annum + Outgoings + GST Building: 237sqm
Brand New Unit in Highly Sought After Location Contemporary 237sqm* facility 204sqm* of clearspan warehouse 33sqm* of A-grade mezzanine office Access via a large container height electric roller door LED lighting, 3-phase power, shower and amenities Four designated car parks - two undercover
ANGUS PAGE 0433 627 769 5
LEASING NOW
FEATURED PROPERTIES THIS MONTH INDUSTRIAL 19-21 Ironstone Road BERRINBA $223,000 PA + Outgoings + GST Building: 1,784sqm Land: 2,891sqm
Brand New Corporate Office/Warehouse In Logistic Hub Of Logan 1,635sqm* High bay warehouse area 149sqm* Professional office area over 2 levels 3 Container height, electric roller doors Up to 7.5m clearance in the warehouse Onsite parking for up to 18 vehicles Large concrete hardstand area with easy truck access and container set down ability
JAMIE DAVEY 0400 763 772
INDUSTRIAL 183 Burnside Road STAPYLTON
$115/sqm + Outgoings + GST Building: 19,567sqm
Multiple Leasing Options - 3,491m² to 19,567m² Sizes ranging from 3,491m2 - 19,567m2 B-double access with multiple crossovers Exclusive concrete hardstand Minimum internal clearance of 12.2 metres in tenancies 2, 3 & 4 ESFR sprinkler system Multiple large roller doors and recessed docks Medium Impact Industry Zoning
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ANGUS PAGE 0433 627 769
SELLING NOW
FEATURED PROPERTIES THIS MONTH OFFICES 21/56 Sanders Street
UPPER MOUNT GRAVATT
$590,000 + GST (if applicable) Building: 107sqm
107m²* Professional Office Suite Walking Distance To Westfield Garden City Total floor area of 107sqm* including an 8sqm* private balcony Professionally presented with modern fit-out Ample natural lighting Generous entry reception area, partitioned board/meeting room and open plan area Ducted air conditioning throughout
JAMIE DAVEY 0400 763 772
INDUSTRIAL Lot 19 Warehouse Circuit YATALA
CONTACT AGENT Building: 1,256sqm Land: 2,450sqm
Brand New A-Grade Facility in Prime Location New 1256sqm* facility on a 2450sqm* block 1019sqm* of clearspan warehouse 237sqm* of A-grade office space over two levels 8m minimum internal warehouse clearance Warehouse access via 3 container height electric roller doors Fenced hardstand with security gate access
ANGUS PAGE 0433 627 769 7
SELLING NOW
FEATURED PROPERTIES THIS MONTH RETAIL 1/104 Compton Road WOODRIDGE
$590,000 + GST
Building: 254sqm
Office/Retail Space With Great Exposure To Compton Road Total floor area of 254sqm* over 2 levels Ideally suited for professional offices or retail users Generous entry showroom/reception area Multiple partitioned offices with meeting/boardrooms over both levels Full glass frontage providing ample natural lighting
JAMIE DAVEY 0400 763 772
INDUSTRIAL Lot 32 Warehouse Circuit YATALA
CONTACT AGENT Building: 1,688sqm Land: 2,915sqm
Premium Industrial Facility - Available Late 2022 Brand new 1688sqm* facility on a 2915sqm* block 1473sqm* of clearspan warehouse 176sqm* of high quality office space 39sqm* of mezzanine storage Minimum internal warehouse clearance of 8m Warehouse access via 3 container height electric roller doors
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ANGUS PAGE 0433 627 769
JUST LEASED LEASED BY ANGUS PAGE INDUSTRIAL 3/11-17 Frank Heck Close
BEENLEIGH
$69,000 + GST Building: 399sqm Land: 674sqm
This was a highly sort after property that generated an enormous level of interest. In total, we received 6 offers on this property in the three weeks that it was available. The property was leased for a 3 year term at asking price. Unfortunately five groups missed out on this property and are still actively looking for a similar building.
ANGUS PAGE Associate Director of Commercial 0433 627 769 angus.page@raywhite.com
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JUST LEASED LEASED BY JAMIE DAVEY OFFICES 1/139-143 Barbaralla Drive
SPRINGWOOD
$210,880 Net PA + GST Building: 659sqm
After spending the better part of 12 months looking at different property options to relocate their donor centre into, Australian Red Cross made the decision to take up residency in the well presented office building at 139-141 Barbaralla Drive, Springwood. There were many office options available to the nationally recognised tenant, but it was the features Barbaralla Drive had to offer that they could not pass up. Features such as the convenient location being walking distance from the Chatswood Central Shopping Centre, the private outdoor area where their staff and customers can relax in the tranquil garden, the open floor plan that will allow for an elaborate fit-out, the large car park that can accommodate upto 55 vehicles and the extra amenities currently installed in the building.
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JAMIE DAVEY Associate Director of Commercial 0400 763 772 jamie.davey@raywhite.com
JUST SOLD SOLD BY JAMIE DAVEY RETAIL Unit 2/104 Compton Road
WOODRIDGE
$375,000 + GST Building: 174sqm
Throughout the extensive marketing campaign we ran on this property, there was a lot of interest from owner occupiers and investors alike. However it was an owner occupier looking to open their own retail dress shop who managed to secure this great opportunity for a very competitive market rate.
JAMIE DAVEY Associate Director of Commercial 0400 763 772 jamie.davey@raywhite.com
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MYTHBUSTERS
COMMERCIAL PROPERTY EDITION with Ray White Economics Team With the onset of COVID-19 changing the way in which we interact with commercial property, there was a lot of speculation around which asset classes would be the “winners and losers”. We heard the discussion surrounding the future of office markets and retail shops given the lockdowns and work from home mandates. Online shopping was expected to change the face of industrial not only for large distribution facilities but smaller last mile warehousing requirements, while the push to buy Australian saw small business and manufacturing would also stimulate this market. As we approach two years on from our first Australian lockdowns, what have the impacts of COVID-19 been on commercial property?
INDUSTRIAL WILL BE THE STANDOUT ASSET CLASS It’s no myth that industrial has been the most active asset class around the country. While industrial is the largest commercial asset class there is, it’s no surprise that it has accounted for more sales transactions than any other property type. However, the great range of industrial property has also seen it the most affordable for first time commercial investors who have grown their activity in 2021. Over the past two years there has been a remarkable increase in new business starts borne from COVID-19. As these mature, the need for accommodation has also grown interest for the owner-occupier segment. In the sub $50 million market, the Australian market recorded $16.23 billion in industrial transactions in 2021, up 123.73 per cent on 2020 results. With an average sale price of $1.83 million, there’s no surprise that both seasoned and new investors together with owner-occupiers have jumped into the industrial market to diversify their portfolio during this time of low interest rates.
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However it’s not just the small end of the market showing encouraging signs, further emphasising the strength of the industrial market has been a number of larger portfolio sales, which have transacted across listed funds and offshore groups. These deals of over $1 billion are supported by yields of sub 4.5 per cent highlight the long term commitment to this asset class. Our need for warehousing, logistics, distribution and storage has been heightened during COVID-19, with online retailing rapidly growing and these trends are not expected to dissipate. Indeed, the trends will further advance as automation and technology move industrial assets into premium, high-value investment assets.
WORKING FROM HOME WILL KILL THE OFFICE MARKET This looks to be busted! While occupancy levels in many major CBD markets were sub 20 per cent for parts of 2020 and 2021, this has been more of a pause than overall changing trend. While not all businesses have been able to weather the COVID-19 storm and have needed to hand back office space or reduce their requirements, we expect this to be a short-term blip on the office radar, which will see vacancy rates increase and impact income levels. However this will be a short to medium term shift in fundamentals for the office market and hasn’t dampened investment demand, which highlights the longer term confidence in office assets. There’s no doubt that COVID-19 changes the way in which we interact with office space, with reduced footprints likely as more employers embrace working from home, while various working models may see more suburban offerings or shared office space an option for some businesses. In 2021, we saw a strong growth in owner-occupier purchased office space with small businesses looking for an alternative to working from home, yet still being close to home. This resulted in $8.55 billion in office sales (sub $50 million) in 2021 across Australia, up 103 per cent on 2020 volumes, while some investors saw strength in tenanted investments with yields of sub 5.5 per cent achieved in some locations. Across the larger end of town, landmark sales in various CBDs again exceeding $1 billion continued to transact with yields as low as four per cent being achieved, as domestic and international funds vie for a piece of premium office stock. These results further highlight the longer term robustness of the office market.
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RETAIL IS DEAD There has been a lot of talk about the future of retail well before the onset of COVID-19 saw retailers have to close their doors. While this has been a difficult time for the retail industry it’s safe to say that this myth is also busted, however, location is definitely a factor. We had already witnessed a push towards online retailing, and growing vacancies in our retail strips and centres impacted rents significantly. Some occupiers have changed the way they interact with their customers, providing concept stores and in-store experiences while transacting online. In addition, the growing food segment in mix-retail locations that were striving to become “foodie destinations” were impacted by COVID19 restaurant closures. All in all, results for the retail market have been mixed with many suburban locations benefitting from the working from home population growing, while CBD locations close their doors. Many food retailers also found it difficult to navigate the changing regulations, and vacancies have been up across many regions. However, savvy owners have looked to reposition their retail assets if traditional retail tenants haven’t been available and subsequently we have seen a large increase in medical users taking up retail spaces. Larger footprints have also been ripe for redevelopment into childcare, fitness/activity spaces or other uses. Despite the challenges, we continue to see buyers eager to purchase these assets. In 2021 Australia saw $8.65 billion (sub $50 million assets) change hands, nearly a 100 per cent increase on 2020 results. Smaller holdings have been attractive to investors with yields ranging from four to seven per cent depending on the quality of asset and tenant, making this a lucrative investment proposition. Similarly, convenience retailing and small centres anchored by supermarkets have recorded robust results given the growth in this segment, however larger centres have seen limited transactional activity over the past 18 months.
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KNOW THE TEAM AT RAY WHITE AKG COMMERCIAL JAMIE DAVEY Associate Director of Commercial 0400 763 772
ANGUS PAGE
RACHAEL CURTIS
GENEVIEVE TREW
Director of Commercial Asset Management
0490 471 535
Associate Director of Commercial
0433 627 769
AVI KHAN Director 0400 666 809
Group General Manager
07 3805 3108
raywhiteakg.com.au
Sales Results We sell more properties than any other agency on the south side of Brisbane, making us the number one agency that sellers trust to achieve an exceptional result.
Scale
Ray White AKG comprises three separate offices and over 40 sales professionals that work together to ensure our sellers benefit from our network of active buyers.
We are professional advisors and negotiators that guide you through the process of selling your commercial asset. We work for you and our priority is to achieve the best result for your situation. We pride ourselves on being honest and providing the highest quality service in the industry. Engaging Ray White AKG will provide you with an individualised, efficient and cost-effective campaign.
Leasing Results Ray White AKG has secured numerous leases across Brisbane, Logan and the Gold Coast. We have worked with a range of companies from small local businesses to the international conglomerates.
Scale
Our extensive database and connections allow us to reach both local and national companies and secure the most suitable tenants for every type of commercial property.
The commercial team at Ray White AKG are experienced local leasing specialists with extensive industry and market knowledge. We strive to achieve the most optimal result for our clients and work hard to secure reliable good quality tenants. You can be assured that by choosing Ray White AKG your property will get the attention that it deserves.
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YOUR ASSET, OUR PRIORITY “I have had the absolute pleasure of leasing out my property through Ray White AKG. From the first point of contact the staff were extremely professional, helpful and went above and beyond for me. I strongly recommend this agency and it has been such a rewarding experience. Thanks again for all of your hard work and I can’t wait to continue this journey with you!” - Liam Fuggle
The long term performance of an investment property is as reliant on the property management as it is on the upfront purchase price. We understand that investment properties require careful management in order to deliver reliable rental income and continued asset growth. It takes a unique industry insight and in-depth product knowledge to maximise financial returns in the commercial property management sector. That is why there is no team better equipped to achieve this than the Commercial Team and Ray White AKG. We are Award - winning property managers who oversee more than 700 rental properties. We bring phenomenal energy and a reputation for results with a 4.9 Google rating as proof of our premium customer advocacy. Our key key point of difference is our hands-on personalised approach with our clients and tenants. This leads to more communication and advice, rather than simply providing a report at the end of each month. For our landlords, this provides them with confidence that their property and tenants are in good care. To Know more about Commercial by Ray White AKG Property Management and our determination to be ‘positively different’, contact our team today!
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