Industrial Property Back in Favour

Industrial on the move.

Industrial on the move.


During 2011, you should start to see private investors re-enter the market for industrial property, following a fall in vacancies during last year — down some 30% in Melbourne.

A Knight Frank survey shows around 300,000 sq metres of space was absorbed … bringing the overall vacancy rate down to under 3% for industrial property.
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Office Leasing the Stand-out Performer

OfficeTake-up
Office leasing activity picked up in most capital cities around Australia, over the past year. In some instances, quite significantly.

And with the supply side basically “on hold”, you should soon start to see this translate into some solid rental increases.
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Space Shortage Looming?

Office Vacancy rates around Australia are falling — albeit faster in some capital cities, than others.

The chart below shows you where things currently stand.
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“Doing Nothing Will Cost You!”

Whenever Investors are confused … the Property Market tends to do nothing and simply moves sideways.

Confusion Reigns

Confusion Reigns


You observed that when the GFC first struck.

People simply put their buying decisions ‘on hold’. And then, frantically played catch-up over the last 12 months … as soon as they realised things were still okay here in Australia.

Over that period, you have seen most Commercial markets around the country showing good growth — particularly in Melbourne.
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“Cycles Ain’t Cycles”

Overall, Australia has sailed through the Global Financial Crisis more or less unscathed. And from all accounts, Victoria and enjoys the standout economy of all the States.

The Traditional Cycle Has Been Interrupted

Last week, you explored the traditional cycle for CBD Offices — being 18 years from peak to peak. And over that same period, Retail and Industrial properties tend to go through several cycles.

Commercial Property Cycles

However, given Australia’s privileged position within the global scene … my view is you are now at the upswing in the cycle for the Office market. In other words, you are already at the halfway point in the traditional Cycle.
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“Capture Your Firm’s Full Value”

Last week, we talked about what you could be missing out on … when you find the need to move.

Whenever you decide to relocate to new Headquarters, what are the key things you are seeking to achieve? [Read more…]

Retail Returns to Favour

Retail property has had some press coverage of late.

It has shown a surprising improvement, given global events and the hike in interest rates.

Westfield (a good retail barometer) reported a strong mid-year result from its Australian shopping centres.

RetailMar2010As you can see from the table, Vacancy rates have fallen significantly and Yields firmed — particularly within the strip shopping centres of Melbourne.

And furthermore, rentals have also started to climb … as the economic recovery has given shoppers confidence to start spending again.

Currently yields ranging between 4% and 6.5% across these various strip centres. And would indicate that investors are returning to retail property once more.

If you are planning to acquire some Retail property, you need …

    1. A strong tenant (well-established, or proven backing);
    2. A long lease (5 years+); and also
    3. Solid rental reviews (CPI or at least 3.75% pa).

With these in place, you should be able enjoy a good long-term investment.

CBD Offices on the Move

Westpac has just released an Australia-wide outlook for Commercial property. And it predicts you will start to see growth in rents and values during 2010-11.

Two Cities

Two Cities

As employment numbers grow with the improved economy, demand for Office space will also take off again.
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What about the Baby-Boomer Effect?

Yesterday, the Federal government released Australia’s third Inter-generational Report.

And about five years ago, I came out with a somewhat startling statement:

“If you haven’t sold your traditional family home by 2010-11 … you had better be prepared to hold it until 2025 — because there simply won’t be a market for it!”

Chatswood ... Sydney

Chatswood … Sydney

And given the recent surge in home sales (particularly in Sydney and Melbourne) over the past 6 months … you would be excused for thinking my prediction might be way off the mark. [Read more…]

The Office Market is Looking Good

While several capital cities still have a reasonably high Office vacancies, there is a general shortage of space looming.

Room to MoveTwelve months ago, it was all doom and gloom for the CBD Office markets in Perth and Brisbane — with falls expected in both rents and values. New projects were being finished, as the resources boom ground to a halt.

In Sydney … investment banks, lawyers and accountants were reducing staff in anticipation of a severe downturn in the finance sector.
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State of the Commercial Market?

CBD Office Vacancies

CBD Office Vacancies


As you would expect, the financial turmoil worldwide has had a significant effect on most property markets. However, the effect has not been the same across the board.

The current state of the various CBD office markets is probably your best barometer of future activity for two reasons. First, the Property Council of Australia (PCA) conducts six-monthly surveys to establish the CBD vacancy rates right around Australia.
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