Welcome to Issue 36 of The Property Development Review, exclusively for agents, developers and investors.
ISSUE NUMBER 36
EXCLUSIVELY FOR PROPERTY DEVELOPERS, INVESTORS & AGENTS
ESG SPECIAL EDITION
LISTINGS The best and latest commercial and development opportunities in Australia.
INTERVIEWS We speak with Australia’s best business leaders.
ANALYSIS Unique perspectives from the deal-makers on the ground.
Flexible debt and equity solutions.
Our developer and investor network have voiced loud and clear their need for simpler and more flexible solutions to navigate the increasingly complex project finance environment. That’s why we’ve teamed up with experienced finance professionals in the field to bring you Ready Capital. We understand transactions through the eyes of the borrower, and leverage our extensive network to source the best solutions that meet real-world finance needs of developers and investors. Property developers and investors choose Ready Capital to arrange market leading finance.
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PropTech x Commercial Finance
Unrivalled National Network
Speed to Market
Unique Capital Advisory
Leverage property tech and insights from leading commercial property portals DevelopmentReady, CommercialReady and DistrictData
Join our deep industry relationships of over 100,000 property professionals across all sectors of the commercial property market.
We use our proprietary technology to stay up to date with credit appetite from a range of 80+ banks, non banks, private funders and institutions.
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Find out more
Visit ReadyCapital.com.au
2 –August / September 2022
THE PROPERTY DEVELOPMENT REVIEW
FROM THE CEO
“WHAT IS GOOD FOR SOCIETY IS ALSO GOOD FOR BUSINESS”
EDITOR IN CHIEF Frank Materia frank@ readymedia.com.au IN-HOUSE WRITERS Sandra Loguidice Callum Hofler ADVERTISING OPPORTUNITIES jamie@ readymedia.com.au PROPERTY LISTING ENQUIRIES info@ readymedia.com.au EDITORIAL ENQUIRIES editor@ readymedia.com.au CONTACT Ready Media Group Head Office Levels 3, 4, & 5 161 Buckhurst St South Melbourne VIC 3205 03 9631 5476 info@ readymedia.com.au
PETTER STORDALEN
Welcome to our ESG special edition of the Property Development Review. This issue has been designed not only to inform, but inspire you about our environment, social justice and diversity, and good corporate governance, because ‘what is good for society is also good for business’. And great companies understand this. They don’t just give lip-service, they are committed to their plans of action from engaging in sustainable practices and running their company in an ethically responsible way, to aligning themselves externally with businesses who do the same. It appears that most corporations agree with this sentiment. Our article ‘How and why these leading organisations go above and beyond’ explores two in-depth interviews about ESG practices from both the builder and agent/tenant perspectives. We speak with both Josephine Sukkar
Also this month it is with great excitement that Ready Media Group announces the launch of Ready Capital - a venture designed to aid property developers and investors arrange tailored financial solutions. Leading this new division of the business is Managing Director Amir Bani, who believes that this offering has the capacity to disrupt a proven formula by offering a boutique service that marries technology with an in-depth knowledge of the financial industry accrued over decades of service in the sector. Ready Capital offers our developer and investor clients a full-line capital advisory service that gives options from project conception to completion. Finally, as always, we have kept you up to date with the newest development sites and commercial investment listings, upcoming auctions and EOI’s as well as our ‘monthly market moves’ around the Country. Enjoy the read.
Nick Headshot - TPDR Intro Pag
AM of Buildcorp and Andy Beasley of Colliers about what is really happening on the ground, and about the positive flow on effects from good ESG practices to their companies, the environment and society. In ‘The Interview’, Rob Langton speaks with Adrian Loader, Co-founder of private equity firm, Allegro Funds; and Anthony Bell , CEO and founder of leading accounting and consulting firm, Bell Partners. We also delve into the life of property developer and ex-bombers vice captain Andrew Welsh , to discover how he came to be entrepreneur and founder of one of Australia’s most notable property development companies, Wel.Co.
MAGAZINE DESIGN Nespecart
ON THE COVER Anders Vestergaard Jensen via-Unslpash
This issue of TPDR has been printed on 100% Recycled Monza Digital paper stock which has FSC® certification.
NICK MATERIA CEO - Ready Media Group
September / October 2022 – 3
List on DevelopmentReady today! Speak with our expert team for more information
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State Manager 0488 882 726
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THE PROPERTY DEVELOPMENT REVIEW
CONTENTS
6 ESG INSIGHTS
10 ESG INSIGHTS Green projects driving better Industrial yields 12 ESG INSIGHTS Landlords take note. Businesses see “sustainability” as major priority for office space 20 FEATURED NEWS $400 million Jane Eliza
ESG: How And Why These Leading Organisations Go Above And Beyond
23 THE INTERVIEW Anthony Bell OAM Founder & CEO Bell Partners 25 THE CAPITAL EXCHANGE With Daniel Farley 14 THE INTERVIEW Adrian Loader Founding Partner - Allegro Funds 18 THE TALK Andrew Welsh still kicking goals
development to be delivered by Wel.Co
21 FEATURED NEWS $200 million land parcel in Sydney’s north-west set to draw investor interest
26 MARKET MOVES 30 AUCTION HUB
MARKET MOVES
Auction Hub
65 PODCASTS Tom Gibson Toby Silk
106 WA MARKET OVERVIEW 96 SA MARKET OVERVIEW 32 NSW MARKET OVERVIEW 66 VIC MARKET OVERVIEW 82 QLD MARKET OVERVIEW
PRICE 68 VIC LISTINGS 34 NSW LISTINGS 84 QLD LISTINGS 98 SA LISTINGS 108 WA LISTINGS $2,275,000 $5,950,000 $4,800,000 $760,000 $4,600,000 $855,000 $1,838,000
ADDRESS
AGENCY
ASSET TYPE
67 Davenport Street, SOUTHPORT, QLD, 4215
Ray White
Office / Retail
325 Mundoolun Connection Road, BOYLAND, QLD, 4275
Ray White
Farming / Land
119-121 Rusden Street, ARMIDALE, NSW, 2350
Burgess Rawson
Office
208 Barkly Street ST KILDA, VIC, 3182
Gross Waddell ICR
Retail
22 Rosenthal Avenue, LANE COVE, NSW, 2066
CI Australia
Office / Retail
4c McInnes Street, RIDLEYTON, SA, 5008
Ray White
Industrial
35 Production Avenue, MOLENDINAR, QLD, 4214
Harcourts Coastal
Office / Industrial
68 Caloundra Road, CALOUNDRA WEST, QLD, 4551
Savills & Colliers
$2,520,000
Retail
$7,000,000 September / October 2022 – 5
21-27 Somerset Place, MELBOURNE CBD, VIC, 3000
JLL
Office
532 City Road, SOUTH MELBOURNE, VIC, 3205
Allard Shelton
$1,400,000
Office / Retail
368 Merrylands Road, MERRYLANDS, NSW, 2160
Burgess Rawson
$7,100,000
Childcare
1120-1124 Albany Highway, BENTLEY, WA, 6102
Burgess Rawson
$10,060,000
Retail
ESG Insights
ESG: HOW AND WHY THESE LEADING ORGANISATIONS GO ABOVE AND BEYOND.
EXCLUSIVE BY SANDRA LOGIUDICE, READY MEDIA GROUP
composition, cybersecurity practices, management structure, executive compensation, bribery and corruptions prevention. Here we discover 2 different perspectives in the industry from Josephine Sukkar AM, Chair of Buildcorp, and Andy Beasley, National Director of Colliers. We discover how and why they are taking action and how the market is dramatically changing in this space, together with real life examples. BUILDCORP - Josephine Sukkar AM How aware are the partners you work with about ESG compared to years ago? ESG factors are now a high priority for our partners and clients and their project funding is increasingly tied to ESG metrics, which is primarily driven by climate action. It’s no longer acceptable to give lip service about ESG because globally, investors are demanding companies operate in a socially responsible way. They want to see actions that are making an impact and ESG is not a passing trend. It’s not a buzz phrase, it’s real. And although most organisations have devised their own ways to improve on corporate governance, be more sustainable, environmentally active and socially responsible, the ESG framework provides a global benchmark, one which appears that most companies are striving to exceed. After all “we cannot be mere consumers of good governance, we must be participants; we must be co-creators”[1]
JOSEPHINE SUKKAR AM - CHAIR OF BUILDCORP
What is ESG? Environmental, social, and corporate governance (ESG) is a framework that grew from a 2004 report titled “Who Cares Wins”[2], a joint initiative of financial institutions and the United Nations (invited by the United Nations). The report has been endorsed by 20 prominent institutions, and in less than 20 years it has now evolved into a framework by which most reputable companies operate. (E)nvironment. This focuses on preserving the natural world with topics such as climate change, greenhouse gas emissions, biodiversity, deforestation, pollution, energy efficiency and water management. (S)ocial: Focuses on people and relationships and includes supporting gender equality and diversity, enhancing customer satisfaction and employee engagement. (G)overnance looks at enhancing corporate governance and addresses of topics such as board
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asset owners.. For example, post the Sydney bushfires and wildfires across Spain and America, many people want to know that the space they’re staying in treads lightly on the land, how the management of running these assets is done, and also the costs of energy. There are a number of ways to attract people now that weren’t there even five years ago. How do you integrate ESG into your business? Can you give us an example? It is something that has always come naturally for us, however, we did have to formalise our approach. For years, Buildcorp has been heavy on the E and S part, because as a private business we comply with the governance we need to. But in the social space, for example, we’ve been involved in rugby union for a long period of time and sponsoring grassroots sport we’ve been able to fund, enforce, encourage, and make change around the participation of women which has been huge and impactful, and I’ve led that with my husband, Tony. We did NSW’s first 6-star Green Star fit-out for Google, have formalised our ESG commitment by becoming a signatory to the UN Global Compact, and have developed our strategy in alignment with the Sustainable Development Goals. We also have a dedicated Head of ESG and a group of employee representatives working across the business to help drive this strategy. In addition, there are over 450 super passionate people at Buildcorp who we engage in these issues and through training, capacity building, and giving them ownership of program delivery, it has contributed to success in this area. Further, the development of our Environment Plan (2022-2030) which we launched earlier this year, is an example of this collaboration between employees and management. It was developed with our people through a series of workshops and forums to ensure their input was incorporated. I understand the Westpac Parramatta Square fitout was aligned with SDG Goal 10, reducing inequality. Can you talk to us about this project? We selected 10 indigenous businesses to provide us with what we were needing to deliver from joinery, hydraulics, and fire alarms, to manufacturing the workstations, meeting room tables and lockers. The collective value of the contracts with these suppliers represented more than 10 per cent of the total contract sum. To put that into perspective, if a tender has an Indigenous participation requirement in it, most Government requirements across Australia generally stipulate between 1.5%-3% Indigenous spend. But more importantly, according to the Sleeping Giant Report by Supply Nation, the Social Return on Investment for Indigenous communities averages $4.41 for every dollar spent. The report also highlighted that Indigenous people are 100 times more likely to hire Indigenous people, and 54% contribute directly back to their communities both financially and through sponsorship of community organisations, mentoring and, developing employment pathways for Indigenous youth. That was a really nice project for us because the clients were happy and our team are really proud of what can be achieved when Indigenous business is prioritised.
providing restorative change. They’re wanting to partner with people who are like-minded, both from a sustainability point of view, as well as a socially ethical point of view. Are they demanding compliance from you? What do they want to see before they engage? Rather than compliance, it’s more driven by finding a like-minded partner who has shared values, them finding that in us as a builder, and delivering a mutually beneficial outcome. We’re also being asked to address a whole raft of other important things around Indigenous participation, gender equality, environment etc. These, however, are not necessarily driven by compliance but rather, are aligned with both our values and done by choice. The only ESG specific “compliance mechanism” now is the Modern Slavery Act. What kind of measures are put in place to ensure a project is ESG compliant? Is this mostly Buildcorp driven, or client driven? Project ESG objectives are laid out in the Tender process upfront, we then work with our partners to develop an ESG Plan that encompasses their set targets and goals. These are usually incorporated into the contracts. Different clients have different ESG measures, but we also have our own that we want to satisfy. So even if the client doesn’t ask for them or ask for them to the degree that we want them to satisfy them, we do it anyway. We then track and report so that we can measure, manage, and see how we’re making an impact. In parallel, we always continue to look for new opportunities throughout the build to exceed our targets via a number of proactive initiatives platforms across Safety, Environment, and Quality that also encourage our people to share and report their innovations as they arise.
Buildcorp Project - Ainsworth Building, Macquarie University.
Do you attract like-minded partners, and do you find ESG is a large part of their decision-making? We do attract like-minded partners. Today the war for talent is real. Especially young employees to the market who understand that ESG measures are important and they want to be in spaces that are greener, have NABERS WELL ratings, Green Star ratings all of which should be able to attract a premium for developers and
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ESG Insights
ESG: HOW AND WHY THESE LEADING ORGANISATIONS GO ABOVE AND BEYOND. CONTINUED
EXCLUSIVE BY SANDRA LOGIUDICE, READY MEDIA GROUP
The Ainsworth Building in Macquarie University was another brilliantly curated project by Buildcorp in terms of the materials used and how you minimised the impact on the environment. Can you talk to us about this new build? A number of years ago, Tony flew to Austria to inspect a plant of low carbon timber which is one way of reducing embodied carbon in the construction sector. The use of this timber reduces embodied carbon by up to 75% compared to the use of conventional steel and concrete, and almost 700 tonnes of structural timber were used on the Ainsworth Building, including a visible structure and core made from prefabricated Cross Laminated Timber (CLT) and Glulam. During the building’s operations, project engineers Arup, estimated that it will save the carbon emission equivalent of five to six years of energy consumption. The other interesting piece of this project was when the timber arrived on site it was wrapped in plastic, something our people were immediately alerted to. They investigated how to work with the supplier to change this and if we couldn’t, what could we do with this plastic to ensure it was reused and recycled. So, at every level, Buildcorp are watching the whole supply chain rather than just talking about the end product. The whole continuum of how we support and protect the environment is undermined in the thinking and being of our people which is great. The little one-percenters all make a big difference and I think it’s important that our people feel empowered to come back to us with recommendations as to how we can do things better and they’re doing it. And that’s the really exciting piece. Josephine Sukkar AM is an Australian business executive and Member of the Order of Australia for her significant service to the community in sporting, social welfare, and cultural organisations as well as to the construction sector. Together with her husband Tony, partner in life and
business, they established Buildcorp in 1990 of which she is nowPrincipal . In 2021, she was appointed the first female Chair of Sport Australia and is also on the board of the Green Building Council of Australia in addition to other boards. The Buildcorp Foundation was also established by Josephine and Tony which is a charity founded in 2015 to tackle the spectrum of our mental health crisis here in Australia.
COLLIERS LEASING - Andy Beasley
Andrew Beasley is National Director of Colliers (Leasing) and has worked with some of the nation’s biggest corporate, institutional and private clients for more than 20 years. His success can be highlighted by his long term involvement with Cbus Property, one of Australia’s leading property developers and their multiple high end CBD projects. How does a ‘green lease’ distinguish itself from a conventional lease? Green leases are generally utilised by government both State and Federal, they’re not common for Corporates. Green leases will have certain requirements
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from a landlord perspective from recycling, down to fresh air and water. Green Star, NABERS, Well certifications are all part of that, the primary use is to ensure that the ongoing use and operation of the building to minimise environmental impacts. What ESG measures are most in focus in the leasing market and what are corporate tenants looking for? Once upon a time you had to buy a luxury car to get airbags however now it’s expected that everyone has them - good ESG practice are much the same. It is now expected that ESG measures, ratings and requirements are standard. Corporates will have requirements in relation to building operations, centred around NABERS energy and water and the operation of the building however green star relates primarily to new builds and materials. If tenants are looking at committing to a new building, they will have more requirements of a landlord in relation to what the building has to achieve in relation to NABERS, Green star, Well and ESG, particularly around carbon. Every building/tenancy required to have a NABERS (Energy) certification if its over 1000sqm, however it is often a challenge for some existing B and C-grade buildings to achieve a high rating, given their older and in some cases the owner’s unwillingness to spend money on upgrades to achieve that higher rating. Institutional landlords are at the forefront to achieve the highest possible ratings as they are seeking to attract not only Government tenants, but also major corporates that have their own green expectations on the buildings they occupy. Major REITs and their investors are also really pushing the green mandate on their investments moving forward, particularly around carbon. They have to maximise their environmental ratings throughout their portfolio and in some cases carbon neutrality through carbon offsets or purchasing green power through sustainable providers. Colliers integrates sustainability into their property management services; what expert advice around sustainability and green building standards do you provide and how do you ensure premises comply? We have an entire ESG/ESD team who advises developers and major clients on existing buildings in relation to the best ESG measures. They will come in and assess the operation of the building and show a roadmap of how they can transition to an improved level. It’s a lot easier with a brand new development to set a benchmark and design around it as opposed to an old building, where unless you have tri-generation or co-generation, its very challenging to achieve that 6-star rating. Although a push for all electric buildings will see gas phased out over time. You have long term involvement with Cbus Property and are currently working on 435 Bourke street, Melbourne. Why is this development so significant? We already had a scheme in place that was developed prior to COVID, then the city effectively was in lockdown. ESG started to
evolve more at this time and was largely centred around a flight to experience. We interviewed many tenants about what else we could do to attract and retain them and give them a good reason to want to come back to work. 435 Bourke Street addresses a lot of those ESG and tenant requirements in a way that no other CBD building has and will provide a better overall customer experience and provide a genuine flight to quality. Cbus Property will mandate the appointed builder track their carbon footprint and try mitigate it from start to finish, from procuring steel to green concrete and other sustainable materials like masonry and avoiding materials that have a high carbon footprint.. They also want access to fresh air, health and well-being, gender equality and diversity in the process. 435 Bourke have 3 dedicated levels to a central sky garden, to let light and fresh air in and although it will still be a conditioned space, you have the option on a nice day for it not to be. There will also be electrical vehicle and scooter charging points, e-bikes, a wellness facility, and a dedicated mezzanine to pilates and consulting rooms. A big game changer however will be the solar facade. Solar panels on a rooftop in an existing building might generate 2-3 % of the buildings base power, however the solar on 435 Bourke street will generate 20% plus. This building is due to be delivered in 2026 however because technology advances so quickly, we’re not going to procure the solar panels until the last minute. So based on the current technology it is about 20% however the view is that the solar panels will be more efficient by the time it’s completed and exceed that 20%. The balance of the building will be powered supplied through a renewable energy supplier, so that’s a big game changer when you’re not relying on the traditional grid to power a building of 60,000 sqm and it will set a very high benchmark moving forward.
435 Bourke Street, Melbourne.
[1] Quote by Rohini Nilekani, writer, author, philanthropist and founder of Arghyam Foundation, a non-profit that focuses on water and sanitation issues. [2] https://www.unepfi.org/fileadmin/events/2004/stocks/who_cares_wins_ global_compact_2004.pdf
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ESG Insights
GREEN PROJECTS DRIVING BETTER INDUSTRIAL YIELDS
EXCLUSIVE BY SANDRA LOGIUDICE, READY MEDIA GROUP
Ross River Solar Farm - Townsville
Better known for its mining and military industries, a green evolution is set to drive the economy of regional city Townsville, and the rest of the country is taking notice.
The rich, north-western Queensland minerals province of Townsville is home to Australia’s largest defence base and is a major manufacturing and logistics hub which is now undergoing a green transformation with several key sustainability projects planned for the region. “There are a number of key projects that are attracting the attention of investors from traditional markets looking for higher investment yields,” Mr Pascoe said. “The Landsdown Eco Industrial Precinct, a hub for environmentally sustainable advanced manufacturing, processing and technology, has now secured funding from all tiers of government and has the potential to create 5,000 new construction jobs and 1,600 ongoing jobs. With around $80million in funding
committed, this is now a reality for Townsville and has the ability to future-proof the town’s economy by becoming a global player in the booming green energy and advance manufacturing space.” There are also other, much talked about billion- dollar projects that are in the planning stage and have the potential to reshape the region. These include the $1.75billion Copperstring 2.0, the $5.4 billion Hells Gate Dam and the $330million Kidston Pumped Hydro Project, now underway. These projects are in addition to traditional infrastructure investments such as the $2.25billion Singapore Military Training initiative shared between Townsville and Rockhampton. Also progressing is the $232 million channel widening at the port of Townsville which will see vessels of up 300 metres accommodated. Once completed, it will deliver improved accessibility for
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the southern areas of Stuart and Cluden reveals strong local and national focus towards the intermodal transport, logistics and warehousing sectors.” James Pascoe from Pascoe Commercial said enquiry from South-Eastern seaboard cities like Melbourne and Sydney for industrial land was booming on the back of a number of sustainability projects gaining momentum in Townsville. “Townsville is often misunderstood as just another mining town that is subject to boom and bust but we are now seeing a big focus from southern investors who are realising the robust fundamentals and potential of the region. Commercial and industrial vacancy rates are the lowest I have seen in 20 years, and while there are some tenancies available, there is a limited pipeline of serviced sites coming to the market to cater for expected future demand.” Mr Pascoe continued, “Our diverse economy, abundance of renewable energy, locality and capability to service the traditional resources industry, form the economic pillars that will further drive growth. When you consider all of the projects either planned or underway in the region, there is no doubt that the region is well and truly on the radar of savvy investors leading up to the 2032 Olympics and further beyond into the future”
Asia and the Pacific as well as being the only port on the eastern seaboard to provide for B Triple/Type 2 Road Train access via the State Development Port Access Road. Collectively, this will create a significant logistical competitive advantage. “All of this is repositioning Townsville and the region as a future-thinking, resilient and safe option for investors looking for higher yielding investments and there will be an increased need for ancillary industrial servicing facilities to support these activities” States Mr. Pascoe. Townsville sits on fertile industrial ground and is currently experiencing prime grade rents which are growing alongside eastern seaboard rents to $125-$135 per m2. Yet land values are comparatively low at around $160 per m2 for serviced blocks. In contrast, prime grade yields for metropolitan markets are around 4.5%, refocusing developers to areas such as Townsville, where vacancy and competition is minimal. Heron Todd White Director Jason Searston commented. “Townsville’s industrial market is continuing along the positive trajectory witnessed over the past 3 years. With the increased activity in the mining sector, we anticipate continued growth in the support services industry, although we will also see potential in the engineering and manufacturing space. Large scale land development in
Port of Townsville Expansion Plan 2025-2050.
September / October 2022 – 11
ESG Insights
LANDLORDS TAKE NOTE: BUSINESSES SEE “SUSTAINABILITY” AS MAJOR PRIORITY FOR OFFICE SPACE
EXCLUSIVE BY CALLUM HOFLER, READY MEDIA GROUP
Photo courtesy of JLL Australia
Ready Media Group recently took an extensive dive into the world of hybrid work, as prompted by JLL’s latest release in their Workforce Preferences Barometer series. Since then, JLL have released their Tenant Perspectives report for H122, and it sheds further light on the ways that the office is adapting to the rise of workforce flexibility and the demand for greater sustainability efforts. Here are some of the key takeaways from this research piece.
hybrid working model, which might not necessitate a business taking up as much core space as it previously had. As such, some organisations are downscaling as their spatial requirements reduce.
Ready Media Group recently took an extensive dive into the world of hybrid work, as prompted by JLL’s latest release in their Workforce Preferences Barometer series. Since then, JLL have released their Tenant Perspectives report for H122, and it sheds further light on the ways that the office is adapting to the rise of workforce flexibility and the demand for greater sustainability efforts. Here are some of the key takeaways from this research piece. Businesses are back on the move With 143,550 sqm in net absorption recorded in 2Q22 across national office markets, office sector activity has rebounded markedly since 2021, when JLL recorded only 21,399 sqm of net absorption in 4Q21. Part of this comes as businesses learn to adjust to the
Top five industries on the move in 2022 - Courtesy of JLL Australia
This isn’t the case for every business though. As Michael Greene, JLL’s Head of Tenant Representation in Australia, points out, “We’ve even seen some businesses
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credentials”, says Patrick McFarland, JLL’s Director of Tenant Representation in NSW. Premium grade building’s vacancy remains lowest In terms of vacancy across the whole of Australia, premium grade buildings continue to possess lower vacancy rates relative to their lesser quality counterparts, as the flight-to-quality is elevating the demand for the best office spaces. In areas like the Melbourne Fringe market, organisations are actively gravitating towards higher quality office assets, with over 54% of new leases recorded being for Premium and A-Grade office stock. For the Sydney CBD, Premium building vacancy remains tight, with only 11.9% of Premium office space vacant, versus 13.6% of A-Grade and 14.0% of B-Grade. The availability of space is most dichotomous in Perth, where Premium vacancy sits at 8.8%, compared to A-Grade at 19.9% and B-Grade at 28.1%. The headline vacancy rate for the city has remained around the 20% level as businesses respond to the accommodation of a more permanently agile workforce by consolidation of space. Conversely, in the Melbourne CBD, Premium Grade (18.7%) has notably higher vacancy than its A-Grade (14.6%) and B-Grade (14.5%) counterparts, all the whilst total vacancy sits at 15%, which is close to the peak vacancy for the CBD over the past 20-years. In conclusion... In JLL’s report, the Director of Tenant Representation in Brisbane, Amanda Foggo, offers some advice that’s intended specifically for Brisbane-based tenants, but feels pertinent for organisations all across Australia: “As the uncertainty of COVID-19 dissipates, the generous incentives are expected to remain, however we are seeing an upward trend in asking rent. This, in turn with higher interest rates and reduced investment activity will see landlords begin to push face rents once again in order to offset asset value reduction.” Rent hikes could very well be on the horizon seeing as the demand for high quality office space has increased substantially over the first half of 2022. Tenants should continue to evaluate their requirements and adjust accordingly, whilst the market remains incentive-rich.
take the same amount of space as they held previously, but with fit-outs that are more socially friendly. “The right office can serve as a catalyst to improve relationships among leadership, enhance communication, drive innovation and create corporate culture. Access to a better range of facilities such as wellness and outdoor spaces, as well as amenities and location all play a pivotal role too.”
Key statistics for sustainability - Courtesy of JLL Australia
The “Professional and Business Services” industry has been one of the biggest contributors to the net absorption figures in 2022 thus far, with nearly each state experiencing significant office space demand from businesses operating in this sector. Since the start of 2021, enquiries from professional services have nearly doubled in Adelaide, and Brisbane has seen some of the city’s largest precommitments for speculative office space originating in the professional services industry. Other industries worth highlighting include Property Operators & Real Estate Service, Insurance & Superannuation Funds, Food & Beverage, and Scientific Services. Sustainability is a commitment that both tenants and landlords are dedicating themselves to. According to Mr. Greene, “25% of corporates have already adopted net zero carbon targets and that figure is expected to more than double by 2025.” This switch to sustainable practices by companies cannot be achieved in a vacuum; for organisations to achieve these lofty goals, they need to work in tandem with the landlords governing their office space. “When organisations commit to net zero carbon targets by a certain date, they’ll also need to ensure that the building they’re occupying, and the landlord are on the same path.” In cases where a tenant’s lease extends over a decade, these discussions need to be conducted earlier rather than later. Anthony Clark, Senior Director of Tenant Representation – Sydney, explains how transparency will be key in navigating decarbonisation efforts in the coming years. “Commitments to net zero may exclude tenants from being able to occupy certain office buildings in the future,” Mr. Clark emphasises. “It’s important to be aware and clear with your sustainability ambitions.” Certain industries are being noted as those prioritising sustainability goals, with operators in the life science sector showing willingness “to pay more for office buildings with green
Vacancy rates for Premium, A-Grade, and B-Grade office stock - Courtesy of JLL Australia
September / October 2022 – 13
The Interview
SCAN OR CLICK TO WATCH THE VIDEO INTERVIEW IN FULL
52 MINUTES
ADRIAN LOADER
With Rob Langton
FOUNDING PARTNER - ALLEGRO FUNDS
Allegro Funds co-founder talks business red flags and his investment criteria Managing Director of Ready Media Group, Rob Langton, recently sat down with Adrian Loader; one of the joint founders of Australian fund manager Allegro Funds. Having started his career with Arthur Anderson & Co in 1993, Mr. Loader had plenty of anecdotes to reflect on. We’ve parsed through the 51 minute-long conversation to bring you the highlights from this extensive discussion. His criteria for investment “As a private equity fund, the first thing you’re trying to do is actually make a return.” It might seem obvious, but Adrian makes sure to emphasise that a priority for selecting an asset is that a profit can be secured for investors. Specifically, Allegro Funds aim to multiply an initial sum by 300 per cent. “We’re a private equity fund; we’re trying to make three times money.” He highlights the multiplicity of ways that Adrian and his team go about achieving this figure. “There are various ways you can do that. You can do that through structuring on the way in; you can do that through an operational improvement.” But it’s not just about having the capacity to take a business in a positive direction; there also needs to be a market to sell that business to.
“Ultimately, up-front, you’re trying to work out: if I transform this business, do I believe there’s a market to sell this business, and that someone’s actually going to pay me an amount of money for it that I can make my targeted returns [with]?” It’s the fundamental principle of supply vs. demand in action. Yes, Adrian can rejuvenate an organisation and enhance its profitability in a substantial way, but all that effort would be for naught if the market has no interest in that venture. Charbel Hazzouri & Anthony Allegro bought Toll Global Express with no management Last year, Allegro Funds acquired Toll Global Express; an express parcel, freight delivery and domestic forwarding service in Australia, and a transport and contract logistics service in New Zealand. Being that the organisation was part of a larger group, it came without a management team in place. “It’s one of the three divisions of Toll Group. We bought one of those divisions, so it came without a CEO, CFO, Chief Information Officer, Chief Customer Officer.” Adrian believes that Allegro’s proven experience with developing well-equipped, capable management groups was what prompted Toll Global Express’s enthusiasm for the deal. “All the systems were largely Toll systems...
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THE PROPERTY DEVELOPMENT REVIEW
the reason why they selected us as the acquirer is that they believed that we could help meet their needs in terms of exiting Toll in a way which helped them operationally.” Adrian has a very particular methodology for navigating these circumstances, and that method is grounded in getting to properly understand exactly what is needed to improve a business. That requires asking simple but direct questions. “We have this very collaborative approach of: what are we actually really building, and how are we actually focusing on how to build a business over a number of years?” For Toll Global Express, it started with creating a more positive culture in the workplace, so employees felt good about the work they’re doing. “Turnarounds are a lot easier if your staff actually want to work there, as opposed to if they hate you or hate the company... our Customer Net Promotor scores went up 20—odd per cent, even though we had no systems changes. That’s just because people cared more and people did more because they wanted the company to do better.” The red flags to look out for when buying a business Whilst there exist a multitude of metrics that can be employed to determine whether an organisation is worth engaging with, Adrian has a few key considerations which give a good indication of a company’s value and worth. Pivotally, a business should have, at some point, turned a profit. “If the business has never made money, it’s probably not the greatest investment.” He acknowledges that companies can lose their way and have their profitability reduced; this, he says, is a lot easier to work with. “If it has made money and it’s lost its way, that’s a way better place to be than if it’s never made money.” Another factor to watch out for: if the customers are enthusiastic about the company or not. If customers hate the company, then it becomes a much bigger job to rectify the situation. “If [the company’s] customers hate it... it’s very different to if the customer’s want the business to do better in the future, and they’re prepared to support it.” His last major red flag considers an organisation’s established following and customer base. If to restore a company, you need to find an audience willing to purchase the product or service they’re offering, you’re already positioned at a disadvantage. “If you’re searching for customers... I think that’s always a very hard place to do a turnaround.” If a business possesses these three red flags, investors should be running and hiding. How involved Adrian and Allegro Funds get when entering a new business Adrian cites Allegro’s involvement with holiday parks operator Discovery Park as an example of a business that he has been integrally involved with, to the point that he had a say on much of
the minutiae of the business. Discovery was established in 2004 with a portfolio of three parks in Western Australia, and by 2008, it had accumulated 40 holiday parks. Despite this rapid growth, the lack of back-end integration and the high level of debt that the company had accumulated meant that the organisation’s prospects looked bleak. “In 2010, we did a financial restructure of [Discovery Parks]. We bought on some other financial partners, and then... [Sunsuper] bought that business in 2014, and they gave us the mandate to help manage that business.” Adrian and his team did not lead from afar. They personally attended many of the company’s locations, to better grasp what Discovery did well and what needed improvements. “I’ve been to 65 of the parks in that business across Australia. We can talk in detail about that business.”
Discovery Parks - One of Allegro’s most successful turnarounds
As such, whilst Adrian and Allegro aren’t considered management, they do have a good understanding of what the business in questions needs, and they are able to bring in management team members that will best cater to those specific needs. “We’ve established a board there which can really help that business prosper. And that business has got an equity value of over $1 billion, and keeps going from strength to strength.” Being a better deal-maker and private equity investor “The real skillset in doing a deal is: do you think you can win, and how do you win?” According to Adrian, to be better at making deals, you have to be extremely critical, and that often manifests in not coming to a resolution. “Some of the best deals you ever do, are the deals you never do.” This might lead to some feelings of regret down the track, but hindsight is not a blessing you have in the midst of negotiations for an asset. Assertions, demands, and price points can only be based on what is known. “Sometimes, you wish that you’d gone a bit harder and bought it when you know that it was a success three years later. And you say, okay, that one got away. But the truth in the matter is that you didn’t know that at that point in time.”
September / October 2022 – 15
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16 – September / October 2022
THE PROPERTY DEVELOPMENT REVIEW
READY MEDIA GROUP’S FORAY INTO PROJECT FINANCE THROUGH UNIQUE JV
BY CALLUM HOFLER, READY MEDIA GROUP
INTRODUCING
AMIR BANI Managing Director of Ready Capital
“Match developers and investors with the right finance solution, online and in real-time: that’s what we want to do.”
Ready Media Group have launched Ready Capital – a venture designed to aid property developers and investors arrange tailored financial solutions. The venture is built on a partnership between experienced finance professionals and property technology specialists, led by company CEO Nick Materia, who founded the DevelopmentReady and CommercialReady property portals. At its head sits Managing Director, Amir Bani, who believes that this offering has the capacity to disrupt a proven formula. By offering a boutique service that marries technology with an in-depth knowledge of the financial industry accrued over decades of service in the sector, Ready Capital can provide a full-line capital advisory service that gives options from project conception to completion. When discussing Ready Capital’s unique selling point, Mr. Bani highlights Ready Media Group’s well-established standing in the property world as a respected private outfit. Ready Capital has the power to leverage their relationships and vast network to achieve great results for their clientele. “We’re a relationship-driven business, and we leverage our national presence, collaborations and networks within the property development, finance and investment industry.” Ready Capital are arranging a bevy of services for both development and commercial property. For developments, land finance, senior debt and mezzanine finance options are available, and commercial property services include loans and specialised expertise for specific asset types, amongst others - The full list of offerings shown opposite. For Mr. Bani, it’s the opportunity to simplify an industry that can sometimes prove labyrinthine that excites him. “Using this service, developers and investors can simultaneously seek on-market properties and evaluate finance options within the same ecosystem – the DevelopmentReady and CommercialReady portals.”
Mr. Bani and the rest of the team at Ready Media Group are proud to launch this innovative tool. Property professionals are encouraged to explore the service and discover Ready Capital’s point-of-difference themselves. “We’ve closed the loop to offer a true end-to-end ecosystem for our developer and investor users.” For Mr. Materia, Ready Capital demonstrates how comprehensively Ready Media Group understands the industry’s demands. “With more than seven years in the portal space, we recognise the real-world needs for property developers and investors when obtaining commercial finance,” he states. “The launch of Ready Capital helps streamline and fast-track that process.” “Ready Capital is now embedded into every online listing across both the DevelopmentReady & CommericalReady portals, instantly allowing buyers to obtain and then understand their financial opportunities across each property. This is an Australian first within the commercial portal markets.” The group plans to continue building out technology solutions that further enhance the business and bring the advancements witnessed in other industries into the commercial finance domain.
September / October 2022 – 17
The Talk
ANDREW WELSH STILL KICKING GOALS
EXCLUSIVE BY SANDRA LOGIUDICE, READY MEDIA GROUP
EXCLUSIVE: Some know Andrew Welsh as Ex-Vice captain of Essendon Football Club. But most now know him as entrepreneur and Founder of one of Australia’s most notable property development companies Wel.Co. In this exclusive interview we talk to Andrew about his journey and what led him to where he is today.
The average career of an AFL footballer is 12-24 months. Andrew Welsh lasted 10 years. This was not only due to his athletic skill and commitment to the game, but also his mental strength and tenacity. Most importantly however, Andrew Welsh was a team player, always has been and looks like he always will be. It’s a quality that has set the tone not only for his football career but also his multi-faceted property development company Wel.Co, with projects in VIC, SA and QLD. “Regardless of what someone’s title is, we’ve all got a piece of the game we need to be playing and everyone has their own expertise so I never want people to feel like they can’t speak up and provide their view as that could make us a better team and better from a project outcome perspective. That’s been my number one
cross over between footy and business. Understanding where the strengths are in a team and allowing those strengths to shine.” THE EARLY DAYS Andrew Welsh grew up in and around Melbourne and although he moved around to a few different schools, this held him in good stead with a wide network of friends that he carried through life. He ended up at Essendon Keilor College, the lure being their offering of AFL as a subject for VCE. “I was avid on football and not so avid on staying at school so that made me stay at school. I was then fortunate enough to be drafted into Essendon AFL which really was the dream come true for me.”
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Despite his notable speed on the field and playing a dozen games in his first season of senior footy, Mr. Welsh still remains modest. “I wasn’t the most gifted and skilful player but I was extremely committed to playing for Essendon and I wanted to be known as a real team player. At a professional level, pure talent can only get you so far. The mental strength and capability is really what keeps you there. And business is no different.” In the last few years of his football career, Andrew Welsh started his business venture SiteTech Solutions, a construction machinery and supplies hire company. In the lead up, he was hungry for knowledge and inspiration and often networked with successful sponsors and supporters to learn and seek guidance about the business world, and it was through this networking, that he identified a gap in the market. Andrew then collaborated with a few mates to grow SiteTech solutions into a significantly sized company that today, largely services the Victorian construction industry. “Some people in their 20’s played video games to switch off from football, my outside interest was business, to look at how I could better it and learn from different people. I was built differently to most of the players, I was generally interested and driven to be successful in business.” And although clearly innate in Andrew’s character, he does attribute some of that discipline and drive to 10 years of working in the professional football world. “I was in an industry where what you ate would make you better, how you train would make you better, who you hanging out with - are they going to make you better? who you are talking to - are they going to make you better? All those years of that mentality has translated positively into what I do today at Wel.Co.” So while other footy players were checking their social media following after training, Andrew, in the last 3 years of his footy career, was checking his emails for SiteTech Solutions orders. And what started out as an enjoyable interest, then became the ideal mechanism to transition his career from football to property development at the young age of 28. “I did a press conference announcing my retirement and that same night I was on a plane to Shanghai to fulfil more ordering commitments.” WELSH’S TRANSITION INTO PROPERTY Although discussions were underway about new football contracts for Welsh his decision had already been made. He felt it was time for someone else to have the opportunity to play with Essendon and was fortunate enough that SiteTech Solutions gave him the ability to move on quickly towards the next chapter of his career. Following his retirement however, contrary to what most would assume, Andrew was working 4 or 5 different jobs; different
organisations in the media, playing local footy in regional Victoria and growing his property businesses, all in parallel. “I was pushing really hard to make sure that the transition financially wasn’t impacting the family as the money I was earning, was all going back into the business. They were tough years, working a number of jobs but to see today what we’ve grown into is the most rewarding piece because it wasn’t something that was handed to me on a platter. I had to work hard for it. Today, Wel.Co is a Melbourne-based multi-billion dollar property development company specialising in building Australian communities in the retail, commercial and residential spaces. They are an agile group with a collaborative style, genuinely enjoying the nature of the game and the people they work with. They pride themselves on their ability to adapt to change and deliver successful outcomes, the Armstrong Creek development (link) being exemplary of this. ”COVID hit a quarter of the way through construction and due to this, the project threw up so many challenges in the most unimaginable circumstances … so to be able to get the centre delivered in the way that it has been, and to see it still continue to grow so significantly, has been very satisfying.” For Welsh however, it all comes back to his enjoyment of working and achieving great results with great people and successfully navigating the challenges along the way. Wel.Co are also largely involved in regional developments, more specifically a Masterplan community in Echuca and Bendigo. “Being development partners for the originals land owners of the properties is really exciting and enjoyable because we’re getting some great history from the farms, can really build some great stories throughout the project and a real depth in the community. Bringing in our expertise and development mangers to help develop family farms is something that we will definitely continue to provide the same service for with other properties.” Yallarah will be one of Victoria’s largest regional developments comprising of over 2000 contemporary home sites and is set amongst the picturesque natural landscape of Echuca. The project is estimated to be completed by 2035. However Andrew’s interest in regional Victoria does not seem to be limited to work alone. Ironically, after a large part of his career in the limelight, big crowds are not his thing. He now much prefers living the regional life with his family catching freshwater crays, camping and fishing. “It allows me to get off the grid, reset and come into Melbourne ready to go again.”
September / October 2022 – 19
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