Connect with us

Commercial

$2.2 billion spree buoys Brisbane office market

Published

on

$2.2 billion spree buoys Brisbane office market

The Brisbane office market, which has been slow to bounce back since the end of the mining boom in 2012, has finally swung into recovery mode following a $2.2 billion spree by investors, according to Savills Research.1

The upbeat assessment comes a month after BIS Oxford Economics urged caution against expectations that the worst was over, arguing that the office market remained in oversupply and that despite new lease deals being struck, absorption rates were minimal.

However, the latest Savills Research Q2-18 Office Quarter Time report sees the office building investment figures over FY18 as clear evidence that green shoots are finally emerging in the Brisbane market.

It says the sales have defied expectations of a softening over the past year with the fringe market posting close to $1 billion in sales. This compares with $796 million in sales a year ago.

“Sales in Brisbane’s fringe office markets were driven by interest from both foreign and domestic private investors driving up demand for assets in the $10 million to $50 million range, whilst domestic institutional investors were driving up demand for larger, more prized prime grade assets,” says Peter Chapple, Savills’ state director of capital transaction in Queensland.

“We expect this level of interest to increase considerably over the next six months as investors chase capital value growth relative to the other east coast markets.

“The Brisbane turnaround story is now taking shape, there is a genuine sense of improvement in the occupier markets and increased confidence from buyers looking to position themselves to take advantage of this dynamic.”

The strong sales performance in the fringe market has been bolstered by a robust CBD market, which recorded $1.2 billion in sales in FY18. This is up from $1.1 billion in FY17.

The surge in sales has led to a fall in Brisbane’s A-grade market yields which are down 0.5 percentage points to 6.15 per cent. Although tightening at a greater rate than southern capitals, they remain well above Sydney yields of 4.9 per cent and Melbourne at 5.2 per cent.

The soft point for the data was a lack of capital growth in the fringe market. However, the CBD market posted a rise of 4.4 per cent in capital values over FY18.

Shrabastee Mallik, Savills’ associate director of capital strategy and research, says there will always be a marked difference between the CBD and fringe market in Brisbane.

“However, given the proximity of the fringe market to the CBD and the ongoing renewal of Brisbane’s fringe office markets, the differences in prices and yields are much less pronounced than in other office markets nationally,” she says.

Meanwhile, Chapple says there is anecdotal evidence that investor interest in the office Brisbane market will boost overall investment volumes in the latter half of the calendar year.
He says the Brisbane office market is benefiting from some of Australia’s best labour market indicators as well as population and economic growth numbers.

However, BIS Oxford Economics is not banking on a Brisbane office recovery until the first half of 2020.

In a report titled Brisbane Commercial Property Prospects 2018-28 released last month, it argues that a buoyant market for investors is pushing new projects into the market earlier than needed.

BIS says Brisbane, with 300,000sqm of vacant space in the CBD, still has some of the highest office leasing incentives in Australia.

Source: www.businessnewsaus.com.au

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Commercial

Brisbane CBD Leasing Market Strongest in 10 Years

Published

on

Brisbane leasing
Brisbane CBD’s leasing market continues to tighten with prime grade office vacancy at its lowest level since 2012.

Research released by JLL has recorded a positive net absorption of 151,200sq m nationwide over the last quarter and 258,600sq m over the 12 months to September 2018.

Brisbane CBD recorded 15,400sq m of net absorption in the third quarter and vacancy tightened to 13.9 per cent.

Over the past year, net absorption in Brisbane totalled 39,600sq m, 29 per cent above the 40-year average of 30,600 square metres.

“Brisbane, Perth and Adelaide will be the office markets to watch closely in 2019,” JLL head of office leasing Tim O’Connor said.

“Leasing enquiry and activity is positive, prime grade vacancy has tightened in Brisbane and Adelaide and we expect owners will start winding back incentives to a level more associated with current vacancy rates.”


Australian CBD Office Markets Net Absorption

Image: JLL
Image: JLL

Adelaide has benefited from growth in the defence, resources and professional services sectors recording positive net absorption of 14,700sq m over the quarter and 23,200sq m over the 12 months to September 2018.

Melbourne has continued to be the standout performer nationwide, recording 79,900sq m of net absorption over the quarter and 187,800sq m over the 12 months to September 2018.

“The Melbourne CBD office leasing market juggernaut continues to roll on,” O’Connor said.

“Melbourne is one of the world’s strongest performing cities and we continue to see a diverse range of industry sectors expanding their occupational footprint in the Melbourne CBD.”


Australian CBD Office Markets, Vacancy Rate by Grade

Image: JLL
Image: JLL

Melbourne’s CBD development pipeline over the next two years is anticipated to be the cities largest year for completions since 1991.

JLL projects vacancy as of 2020 will sit around 6 per cent, well below equilibrium of 7 per cent to 9 per cent for the Melbourne CBD.

Sydney CBD recorded 8,800sq m of net absorption over the 12 months to September 2018 and vacancy was 4.7 per cent, exerting upward pressure on Sydney CBD rents.

“Two more WeWork facilities opened last quarter and we are speaking with a number of potential new co-working operators,” O’Connor said.

Sydney currently faces challenges for new entrants with a lack of contiguous space within the CBD.

Source: theurbandeveloper.cmail20.com

Continue Reading

Commercial

Brisbane’s Hotel Market Welcomes New Offering

Published

on

brisbane's hotel market
Hong Kong-based Ovolo Hotel Group has announced its latest flagship Queensland hotel will open its doors next month after spending $55 million transforming the former Emporium Hotel in Fortitude Valley.

Ovolo purchased the 103-room hotel for $41 million earlier this year and quickly set in motion plans to transform the building’s decor to reflect its reputation for “fabulous and unconventional” amenities.

The multimillion-dollar renovation which has been spearheaded by Woods Bagot, aims to provide a “whimsical oasis for guests”, rife with playful and colourful elements, commissioned art pieces, custom wallpapers and eccentric furniture.

“Our brief to Woods Bagot was that each of our hotels must have their own unique personality and style, inspired by local surrounds, culture, heritage and Ovolo’s playful, forward-thinking spirit, and they’ve delivered exactly that with The Valley,” Ovolo Group chief executive Girish Jhunjhnuwala said.

“There is an element of fantasy, escapism and play in The Valley. We’re positioning it as the perfect contemporary oasis to escape our busy urban lives.”

brisbanes hotel

Ovolo’s rock star suites honour the late David Bowie with 1970s inspired velvet lounges and a gold bars.

“With investments totalling around $90 million this project is helping to solidify Brisbane’s reputation as a world-class destination,” Tourism Industry development minister Kate Jones said.

Ovolo has been very active in the Australian market since opening its first Australian hotel in 2013, Melbourne’s Ovolo Laneways.

The hotelier isn’t a stranger to large-scale renovations having purchased the site of the former Blue and the W hotels in Woolloomooloo for $35 million in 2014.

Ovolo spent $20 million on renovations on the site of the former Blue and the W hotels along the historic Woolloomooloo wharf.

The group’s Inchcolm Hotel located in Brisbane’s Spring Hill has also revitalised a heritage-listed building, after paying $16.5 million for the property.

Ovolo now holds hotels in Melbourne, Brisbane and Canberra, with three more located in Hong Kong.

Brisbane’s luxury hotel sector is one of the busiest in the country with a range of new brands opening or under construction.

brisbanes hotel

brisbane's hotel market

The Westin will be within walking distance of Queen Street Mall, Eagle Street Pier, the Botanic Gardens and the South Bank Parklands and arts precinct.

Emporium has now moved and opened its new 143 room 5-star hotel as part of the the $600 million Southpoint precinct in Southbank developed by Brisbane family-owned Anthony John Group.

The Calile, The Malouf family’s new $100 million 175-guest room hotel, inspired by Miami, Palm Springs and Rio de Janeiro, has also opened its doors in Fortitude Valley

US hotel chain Starwood Hotels and Resorts has also brought the first Westin branded hotel to Queensland.

Starwood’s fourth Westin hotel in Australia, featuring 286 guest rooms, is due to open in November.

Adina has also taken a landmark, early 20th-­century bank on the corner of George and Elizabeth Streets and transformed it into a glamor­ous 220-room hotel with river views and heritage features.

Developers Deague Group, creator of the renowned Art Series Hotels, also have plans for a 164-room hotel as part of the $200 million Howard Smith Wharves redevelopment, which is currently underway.

Brisbane has also become home to Australia’s only W hotel, the city’s first 5-Star hotel in 20 years.

The new 312-room hotel is part of the ambitious Brisbane Quarter project, a mixed-use, three-building development comprised of residences, offices, restaurants, and retail.

Source: theurbandeveloper.cmail19.com

Continue Reading

Commercial

Brisbane Airport Expands as 24-Hour Trade and Commerce Centre

Published

on

brisbane airport
Leading market research has revealed that Brisbane Airport Corporation (BAC) has a promising property future with overwhelming tenant and employee satisfaction rates ahead of several key project completions by its property division, BNE Property.

The research findings were gathered from a questionnaire aimed at current businesses and a survey of BNE workers, which produced valuable insights from over 425 businesses and 1,000 airport workers.

Brisbane Airport’s status as a 24-hour global trade and commerce centre has seen it expand rapidly within retail, commercial and industrial sectors – with employees and businesses maintaining high satisfaction rates throughout key growth cycles.

Currently more than 4 out of 5 businesses who are established at Brisbane Airport indicate that performance at the vibrant commercial and lifestyle precinct is either very good or excellent.

Further research has found that 94 per cent of over 425 business sites recognise BNE as a stable or growing market opportunity.

With 90 per cent of current airport workers (out of the 24,000 employees that work on BNE or with BAC) also enjoy working at Brisbane Airport, while an impressive 98 per cent recognise the positive impact the area has on the Queensland economy.

BNE Property attribute this satisfaction to their own vision for a partnership between BAC and the growing, diverse tenant base at the airport.

BNE Property is responsible for guiding sustainable property development for Brisbane Airport and managing a property portfolio valued at over $1.3 billion, spread over 2,700 hectares – with upcoming projects set to continue growth for the precinct.

Over 500 hectares of land is available for landside development and the company is designing unique spaces and looking at opportunities which could potentially close their 0.9 per cent vacancy rate, currently the lowest in the country.

Work on the landmark Skygate Home & Life Centre began at Brisbane Airport in November 2017, encompassing 9,260 square metres of large format retail space and becoming one of the latest additions to the BNE Property portfolio.

brisbane airport

The project attracted pre-commitments from big brands such as Nick Scali, Pillow Talk and Lighting Illusions, making the new centre an impressive addition to the Brisbane Airport community and further growing their reputation for excellent public amenity.

In the same year, BNE Property announced its one-of-a-kind $300 million Auto Mall development at the heart of the airport precinct. Planned around a multi-purpose 2.5-kilometre performance track, the innovative Auto Mall will bring together flagship dealerships, auto retailing, exhibition and conference facilities, and a range of event areas.

Each of these projects coincide with Brisbane Airport’s new runway, which 70 per cent of businesses in the precinct believe will have a positive impact on their business.

The second runway is designed not only to positively impact the businesses at the airport but also contribute to the precinct’s uniquely Queensland offering.

The $1.3 billion project employs 90 per cent of its workers from South-East Queensland and sources 90 per cent of its construction equipment for the 360 hectare site from local areas. The new 3.3 km runway and its associated development confirms BAC’s commitment to the local community.

BNE Property’s vision for the future incorporates all current tenants in the next steps of the journey. The airport’s prime location only 15 minutes from the Brisbane CBD and its connection to major arterial roads means the land is being prepared for future growth and the development of more retail and commercial offerings.

Future development opportunities in BNE’s property pipeline include industrial sites at Skygate and Airport Industrial Park alongside commercial sites at Boulevard Business Park.

Source: theurbandeveloper.com

Continue Reading

Positive Cashflow

duplex designs, dual occupancy homes

Trending