THE PROPERTY DEVELOPMENT REVIEW
again, stock is tight so if you’ve got a building to lease and you present it right and price it right, you’re going to move it. I wanted to ask you about inflation and the impact on tenants and landlords – what’s your gauge on how that’s playing out at a ground-level. Well, look, consumers and tenants, they may be concerned about inflationary pressure at the moment and hearing it obviously every day in the legacy media. What you’ve got to remember is that CPI was sitting at 2% or under for several years leading into this period. The pendulum has finally swung, hasn’t it? So understandably, tenants now want to fix their rent reviews, not go with CPI. It used to be the other way around. We are now averaging probably 4% fixed reviews though that might get to 5% soon if inflation doesn’t come under control. Facey Property obviously is a very well-known and well-regarded business here in Melbourne and particularly in the South-East of Melbourne, talk us through the partnership with Industrial Commercial Partners and the benefits it brings. The idea was born to partner up with like-minded, boutique agencies across the country, with each having its own in-depth knowledge of their respective market. So, the agencies involved have excellent reputations in their own states, and we’re able to sort of collaborate with them, refer business to each other. Its proven to be a really great network, actually, just as a real estate person, that we can lean on each other to come up with solutions. If I’ve got a client that I can put it in the hands of one of our partners nationwide, I’ve got no hesitation in doing that. I know they’re going to treat them with the same professionalism and follow through that we pride ourselves on.
perhaps a slight dipping in confidence, which has resulted in the buyer pool being somewhat reduced. So you’ve got to think fairly carefully about how you position the asset at the moment. The benefit is that the opportunities that are out there don’t have as much competition. With regard to some of the market feedback we’re getting, it’s all about communicating with our vendors. At the end of the day, they want to get a result. We’re there to deliver that result, but we’ve got to get their mindset right based on market feedback and provided you do those things, you’re going to get transactions. And just in terms of building costs, what impact is that having at a practical level on the market that you operate in? Look, developers are lacking some confidence, but the good developers have always been very good at doing their due diligence anyway. They just need to take the current market confidence into account. So, in their pricing, I suppose they’ve just got to probably be a bit more competitive than maybe they were in the last two years. They’ve been pretty aggressive leading up until now. But with that slight softening, particularly in the say, 1000 square metre market, which we do a fair bit of, they’ve probably just got to strategize around how they price things. We often will do a development of units and we’ll price and competitively sell the first 5 to 10. Then you get your uplift in price and you’ve got that momentum to carry that forward. Just on the leasing front, how are you finding interest from tenants at the moment? Yeah, look, tenant demand is still fairly strong, particularly for primary and second grade assets. Those that aren’t presenting as well are starting to struggle a bit more. But
April / May 2023 – 21
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