THE PROPERTY DEVELOPMENT REVIEW
as well as several partial refurbishments coming back online. Demand is still high within the CBD, especially interest from resource firms wanting to be in the CBD. Interest from tenants affiliated with renewable energy, rare earth minerals and technology based mining services is apparent. Vacancy rates have increased slightly in the first half of 2022 to 15.8% given numerous partial refurbishments have come back onto the market, however tightening in premium space is evident with the vacancy rate dropping to 4.8% from 6.7% between Jan-22 and
Retail Retail sales in Australia continue to outperform market expectations, with eight straight months of growth recorded despite continued interest rate rises, as both retailers and consumers are excited about the approaching Christmas trade. We continue to see demand for quality assets situated within strong catchments on large parcels of land. We have seen renewed interest in the sub regional shopping centre from a diverse buyer pool and expect this trend to continue. Industrial The Australian industrial and logistics sector has continued to show its strength over the past quarter, particularly within the occupier market. Tenant demand continues to run well above long-term averages which has driven vacancy rates to a new low of 0.9% nationally and driven rental growth of almost 20.0% over the year. The outlook for the sector remains robust, although the pace of growth is expected to slow as consumers reign in their household budget in light of the rising cost of living pressures. What types of assets are most in-demand given the current environment? Neighbourhood shopping centres remain a highly coveted investment amongst family offices, syndicators and institutional investors. The everyday needs of the community surrounding
these centres are well met in a highly convenient format that appeals to all age groups. Investors are attracted to the reliable nature of cash flow given that the supermarket tenant pays a high proportion of the annual base rent. What are your expectations for the commercial property market over the next twelve months? We expect interest in the industrial and office sectors to remain buoyant. Interest in healthcare and retirement living sectors is expected to continue to flourish as is the increase in demand for childcare centres leased to strong tenant covenants. We believe that the value proposition for investing in WA remains very positive. The WA economy is performing very strongly creating a high level of business confidence. Yields in Western Australia provide investors an opportunity to purchase assets with strong fundamentals at significant discounts to similar properties on the east coast of Australia.
Jul-22 (PCA). CBD Office
Leasing deals throughout the quarter were weighted towards Prime grade assets as relocation activity continues to be driven by requirements for a higher overall quality of asset, strong ESG credentials, as well as the overall experience of the office and the location on offer. Metro Office Newer, well-located buildings, continue to benefit from the flight-to-quality and flight-to experience thematic, and are more readily occupied, leaving behind backfill space and keeping vacancy elevated in secondary stock. Investment activity has been more muted over the three quarters to September 2022, recording $3,684.5m in sales in the main Sydney, Melbourne, Brisbane, Adelaide and Perth metro markets.
October / November 2022 – 97
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