Breaking news and updates daily. Subscribe to our Newsletter!

Home of the REB Top 100 Agents
Breaking news and updates daily. Subscribe to our newsletter

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

‘Post-recession rush’ predicted for Australia’s commercial property

By Maja Garaca Djurdjevic
29 January 2021 | 1 minute read
Brisbane

Australia is gearing up for a post-recession rush, with an increase in demand for office assets expected in the first quarter of 2021.

According to Colliers International, as a growing number of workers return to their offices, vendors and investors are expected to review acquisitions, with demand for office assets expected to soar during what’s usually a relatively quiet period.

Overseas investors are forecasted to up their interest in Australia’s office sector, particularly that in Melbourne, while a recovery in white-collar employment should enhance demand for office space in Brisbane’s CBD, which is already seeing a gradual improvement in the occupancy rate.

Colliers is also predicting a return of listed REITs, while the asset class to watch outside of office is the build-to-rent (BTR) sector, which is growing in prominence on the back of changing office-occupier dynamics.

Brisbane

Looking at Australia’s capital cities individually, Colliers tipped that investment activity could remain subdued in Brisbane as the supply of new developments remains limited until 2025.

“We estimate there has been a nearly 80 per cent drop in leasing activity in the Brisbane CBD office market, which saw about 35,000 sq m in leasing transactions in 2020 compared to 160,000 sq m in 2019,” Colliers national directors of capital markets Jason Lynch and Don Mackenzie said.

But Brisbane CBD’s office occupancy rate has continued to gradually improve, rising above 60 per cent, while increases in tenant incentives have caused a reduction of net effective rents to 2018 levels when the vacancy rate was above 14.5 per cent.

“Job creation in sectors such as public administration and safety, and professional, scientific and technical services, are expected to drive a recovery in white-collar employment and base office demand in the Brisbane CBD,” the pair said.

The experts also touted an increase in investment activity during H1 2021, once domestic borders have reopened, following an estimated reduction of nearly 97 per cent last year – from the $2.9 billion transacted in 2019 to the $103.2 million in sales transacted in 2020.

Melbourne

Melbourne saw an “extremely positive” fourth quarter, as Victoria emerged from lockdown and interstate borders reopened.

According to Colliers, this year’s office transactions have already confirmed the resilience of Melbourne’s office market, with minimal distress evident and prices generally trading at book values, which broadly speaking held or decreased 5-10 per cent between March and December for at-risk assets.

As the year draws to a close and confidence returns, investors are said to be poised for an active 2021.

“We expect to see a deeper buyer pool for the Melbourne office sector, with continued interest from offshore investors as well as the return of listed REITs, whose share prices precluded them from much activity in 2020,” said Collier’s Victoria-based managing director, John Marasco, director of capital markets Trent Preece and associate director of capital markets Anna Caver.

“We anticipate further selldowns within the prime grade space, as some larger landlords continue to reduce leasing risk exposure,” the experts added.

Sydney

Sydney, too, is expected to boast an increase in demand for office assets, with core grade assets expected to garner the most attention from investors and landlords.

As most major corporates plan to move their employees back to the office, Collier’s predicted that the return to the office environment, which is likely to occur during Q1 2021, will create greater confidence and certainty moving forward, and provide buoyancy to the market.

Collier’s also highlighted several “to-watch deals”, including the sale of Macquarie Park at 1–5 Thomas Holt Drive, Sydney, for $295 million to CapitaLand/Ascendas REIT; the sale of a 50 per cent stake in Grosvenor Place, 225 George Street, Sydney, for $925 million to CIC/Mirvac (co-owner); and the sale of a 25 per cent stake in GPT/GMT, 1 Farrer Place, Sydney, for $584.6 million to APPF Lendlease (co-owner).

‘Post-recession rush’ predicted for Australia’s commercial property
Brisbane CBD new reb
lawyersweekly logo

Never miss a beat with

Stay across what’s happening in the Australian commercial property market by signing up to receive industry-specific news and policy alerts, agency updates, and insights from reb.

Subscribe to reb Commercial:

Rankings
rankings
JUST RELEASED
May 09, 2022

REB Top 50 Women in Real Estate 2022

REB is thrilled to present the Top 50 Women in Real Estate 2022 ranking, which sets t ... LEARN MORE

rankings
JUST RELEASED
May 04, 2022

REB Top 100 Agents 2022

Now in its second decade, the REB Top 100 Agents 2022 rankings are the most revered s ... LEARN MORE

rankings
JUST RELEASED
May 02, 2022

REB Top 50 Agents NSW 2022

Even a pandemic has not put the brakes on the unstoppable property market in NSW, whi ... LEARN MORE

rankings
JUST RELEASED
April 27, 2022

REB Top 50 Agents VIC 2022

The COVID-19 crisis has not deterred the property market in Victoria, which has been ... LEARN MORE

rankings
JUST RELEASED
April 25, 2022

REB Top 50 Agents QLD 2022

As the property market continues to roar in Brisbane and Queensland, the REB Top 50 A ... LEARN MORE

Coming up

rankings rankings
Do you have an industry update?

top suburbs

12 month growth
Mirador
103.33%
Bawley Point
98.13%
Walla Walla
90.7%
Byron Bay
86.67%
Kiama Heights
85.93%
Greta
84.14%
Nulkaba
81%
South Hobart
78.78%
Diddillibah
76.25%
Lennox Head
73.98%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
Subscribe to Newsletter

Ensure you never miss an issue of the Real Estate Business Bulletin.
Enter your email to receive the latest real estate advice and tools to help you sell.