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Demand For Industrial Property Drives Building Approvals North




trial building approval values grew by more than 15 per cent in the year to February 2018. Photo: Supplied

Unprecedented demand for warehouses and a renaissance in some areas of manufacturing have driven industrial building approvals through the roof.

The increasing reliance on online shopping from traditional retailers, as well as the rise of online-only e-tailers like Amazon, have pushed up demand for distribution centres, especially in locations linked to key motorways and transport hubs.

Many investors are looking north to Brisbane for better returns, as Sydney becomes more land-constrained and yields continue to tighten.

More than $535 million worth of approvals were granted nationally for industrial developments in February alone, the latest Australian Bureau of Statistics data, released on Wednesday, shows. That figure had surged by more than 100 per cent from the previous month.

Total industrial property, including factories and warehouses, recorded an uplift in approval values of more than 15 per cent in the 12 months to February 2018 – the strongest growth across the commercial asset classes.

Leda Holdings has paid $36 million for a 1.85-hectare industrial site in Sydney’s Banksmeadow. Photo: Supplied

AMP Capital chief economist Shane Oliver said the strong interest in the industrial property sector “comes back to e-commerce activity”.

“I think rents are rising very strongly so that’s encouraged a pick-up in approvals for industrial complexes or warehouses.”

While most industrial construction approvals were for warehouses, it was factories which saw the most dramatic uplift in approval values, with year-on-year growth of 117 per cent – with a 300-per-cent surge from January to February.

Colliers International’s head of industrial research Sass J-Baleh said the Australian food manufacturing and cold storage sectors have and will continue to see strong growth in the next few years, thanks to expansion in the food sector.

“It is important to note that there are many sub-sectors within the overall manufacturing industry and that although historic headline figures have shown an unfavourable trend in manufacturing, there are definitely sub-sectors that have demonstrated recent growth,” she said.

This aligns with the Australian Industry Group’s latest Australian Performance of Manufacturing Index, which hit a record high of 63.1. A PMI above 50 indicates an expansion in overall manufacturing activity.

The value of all non-residential building approvals grew by 4.4 per cent in the 12 months to February 2018 – to more than $3.58 billion worth of approvals. It climbed back by 14.8 per cent in February from the previous month.

Master Builders Australia’s Matthew Pollock expects non-residential building activity to grow by 14.6 per cent in 2018, with an estimated $41.5 billion worth of projects to be completed.

“(The upswing in approvals) confirms the strongest outlook that commercial construction has enjoyed in years and that the long awaited upturn in the sector is underway,” he said.

Brisbane “riding upswing” market

An industrial site at 14-26 Commercial Road, Kingsgrove is tipped to fetch about $15 million. Photo: Supplied

Research released by Cushman and Wakefield on Thursday reveals that the volume of investment in industrial property has increased nationally by 38 per cent to $982 million in the three months to March 31.

Cushman and Wakefield’s head of research Dominic Brown said that Brisbane had been the strong performer in the past few quarters, where more investors were looking at the recovery in that market.

The combined three-year investment volume for Brisbane – at $1.1 billion – is at its highest level since the third quarter of 2015.

“In Queensland, it was still in negative territory until about two years ago and it’s only in the past couple of years that it’s returned to positive economic growth,” he said.

“If you think of where pricing is at in the three cities, investors are now looking towards Brisbane as they see it as a growth opportunity, whereas pricing in Melbourne and Sydney have moved forward quite a long way over the past couple of years.”

While Mr Brown’s outlook for Brisbane remains positive, he noted that discrepancies between vendor and buyer price expectations could limit future investment activity.

Sydney has recorded the lowest three-year investment volume of $869 million among the three eastern seaboard capital cities because of limited stock and declining returns.

The highest result was achieved by Melbourne, where $1.2 billion worth of deals went through in the past three years. But the Cushman and Wakefield report noted that transactions in that market “has been largely flat over the past 18 months… due to lack of available stock”.

Despite this, capital values of vacant land in Melbourne shot up 36 per cent year-on-year.


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QIC Lists Up to $2 Billion of Assets



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Fund giant QIC has listed two CBD assets, one in Brisbane and another in Melbourne.

QIC has listed its landmark 80 Collins Street development, as well as its surrounding precinct of properties creating one of Melbourne’s largest-ever office, hotel and retail property offerings.

The second of the listings, located at 61 Mary Street in Brisbane’s CBD, is an office tower held in QIC’s Government Office Fund.

The listing comes as major government infrastructure projectsincluding the $3 billion construction of Queen’s Wharf, Cross River Rail and the Brisbane Metro start to change the landscape and accessibility of Brisbane’s CBD.

The prime CBD assets together are expected to yield north of $2 billion.


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QIC’s 61 Mary Street in Brisbane could fetch as much as $300 million.

The 17-level tower at 61 Mary Street has 28,749 sq m of net lettable area and an average lease expiry of more than 10 years.

Over the past several years the tower has undergone a $44 million refurbishment and has been awarded a 5 Star NABERS energy rating.

It boasts one of the most expansive floor plates in the Brisbane’s CBD, up to 2,030 square metres.

QIC has appointed Knight Frank’s Justin Bond, Ben McGrath and Neil Brookes along with CBRE’s Tom Phipps, Bruce Baker and Flint Davidson, to broker the property.

“Fully occupied by the Queensland state government under a lease until 2029, 61 Mary Street is a unique investment ideally located within proximity to the Queens Wharf precinct and the proposed Cross River Rail project,” Knight Frank’s Justin Bond said.

“While strong domestic interest continues for Brisbane, throughout 2018 we have also witnessed increasing investor demand from Asia, Europe and the US, with limited availability in the market for CBD assets offering long-term secure income.”

CBRE’s senior director of capital markets Tom Phipps said the sale campaign has come at the right time with a strengthening confidence in Queensland’s property market.


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QIC’s 52-storey 80 Collins Street was once known as Nauru House.Image: Woods Bagot

The second of the two offerings is the precinct controlled by QIC located at the “Paris end” of Melbourne’s Collins Street including QIC’s existing 52-storey office tower at 80 Collins Street.

Around that existing tower, and part of the current listing, is QIC’s $800 million mixed use development.

The mixed-use tower was designed by Woods Bagot, and Seventh Wave, along with Amsterdam-based UN Studio and Paris-based Jouin Manku.

QIC lodged plans to ­develop the mixed-use complex in 2008, capitalising on ownership of multiple properties on Collins Street.

The project comprises a 39-storey office tower, along with a 300-room hotel – to be operated by NEXT, as well as retail offerings throughout the podium levels of around 5,800 square metres.

“80 Collins will be a destination that honours Melbourne’s thriving culture and commerce and is situated at the centre of a globally recognised precinct with a distinct local identity,” QIC managing director Steve Leigh said.

The tower, which overlooks the Royal Botanic Gardens, has been designed to achieve a 5-star NABERS energy rating and a 6-star Green Star office design rating.

Multiplex is currently building the new tower, which will have a blue-chip tenants including investment bank Macquarie who have taken a reported 6000sq m of the leasable 43,000 sq m tower.

The total precinct is expected to sell for about $1.8 billion.


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Charter Hall Buys Brisbane No 1 Skyscraper Site for $94m



Charter Hall Buys Brisbane No 1 Skyscraper Site for $94m

Active property fund manager Charter Hall has acquired the high-profile development site for No. 1 Brisbane, a proposed 81-storey skyscraper on Brisbane’s Queen Street Mall that won approval in 2017.

The Blackstone-owned 151 Property Core Plus Management fund listed the site in February. The parcel comprises three office buildings with a total lettable area of 10,183sq m and three separate frontages to the Queen Street Mall, George Street and Burnett Lane.

The purchase price of $93.96 million represents a core cap rate of 7.45 per cent and a fully-let passing yield of 7.9 per cent.

Charter Hall has been dominant in Brisbane’s office market this year – on Monday, two of its funds picked up Ariande’s 40 Tank Street building for $93 million and, along with Investa, Charter Hall won approval for a $650 million office tower on Queen Street last month.

The fund manager has also secured QSuper for nearly 18,000sq m at its Brisbane Square Tower and acquired the landmark Suncorp Plaza tower in Albert Street.

Charter Hall Buys Brisbane No 1 Skyscraper Site for $94m

Charter Hall’s David Harrison suggested that the group will likely pursue a more modest redevelopment of the site, similar to its successful 333 George Street project in Sydney. Pictured: Brisbane No 1 (left), 333 George Street (right).

Charter Hall managing director David Harrison said that the acquisition will be used as a seed asset for a new investment strategy.

“This is a rare opportunity to acquire three prime retail/office buildings, at close to office values per square metre, that have created a fantastic amalgamated future redevelopment opportunity which can be held over the medium term in a CBD undergoing significant infrastructure improvements.”

Charter Hall Buys Brisbane No 1 Skyscraper Site for $94m

Charter Hall won approval for a 50,000sq m office project in Brisbane’s “golden triangle” – the Eagle Street and Riverside Place Area – in late June. Pictured: A rendering of the 370 Queen Street proposal.

Harrison suggested that the group may not move ahead with the approved plans for what would be Brisbane’s tallest tower, saying that the group will consider redevelopment longer term “while we actively manage and lease up vacancies”.
“Eventually our vision would see a new development like the successful 333 George Street project in Sydney CBD opposite Martin Place completed.”

Charter Hall’s 15-storey 333 George Street development, designed by Grimshaw with Crone architects, would deliver a much more modest outcome for the site than the approved 81-storey skyscraper.

The $250 million George Street project in Sydney secured WeWork as its anchor tenant – the co-working giant took a third of the entire lease – and was recently awarded commendations in the commercial architecture category and the City of Sydney Lord Mayor’s prize category at the 2018 NSW Architecture Awards.


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Charter Hall Buys $93m Brisbane Tower from Kevin Seymour, Ariande



Charter Hall Buys $93m Brisbane Tower from Kevin Seymour, Ariande

ASX-listed Ariadne Australia has capitalised on Brisbane’s booming office market with the sale of 40 Tank Street to a pair of Charter Hall-run funds for $93 million.

The sale is $37 million more than Ariadne and its deputy chairman Kevin Seymour paid US private equity giant Blackstone for the building little over a year ago.

The purchase was made by the listed Charter Hall Long WALE REIT and the unlisted Charter Hall Direct PFA Fund in a deal struck on an initial yield of 5.84 per cent.

The 10-storey office building comprises a net lettable area of 6218sq m and 327 car parking bays across five levels.

Charter Hall Buys $93m Brisbane Tower from Kevin Seymour, Ariande

40 Tank Street Brisbane

The building, which was 80 per cent occupied when purchased by Ariadne last year, has benefited from the company’s repositioning of the occupancy and renegotiated a new partnership with Care Park.

The state government’s police services also took out the remaining space in the tower’s office at a weighted average lease expiry of 6.3 years.

Ariadne expects that net profit before tax would be $17.6m-$19.6m, down on the previous year’s $76.9m profit that was bolstered by a $67.1m gain on selling Secure Parking.

Ariadne will collect $14.8 million in net proceeds from its share, to be included in its 2018 fiscal year result.

JLL’s Geoff McIntyre, Seb Turnbull and Luke Billiau brokered the deal which is scheduled to settle at the end of August.

Brisbane’s office market is currently enjoying the positive effects of an economic turnaround coupled with a flurry of investment activity.

Almost $2 billion worth transactions taking place in the city’s office markets last financial year.

Last week, Mirvac agreed to sell 50 per cent of its 80 Ann Street Brisbane CBD tower to British fund manager M&G Property’s Asian property fund for $418 million on a 5 per cent cap rate.


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