STILL SOME PAIN AS BRISBANE COMMERCIAL PICKS UP

Written on the 29 October 2015

STILL SOME PAIN AS BRISBANE COMMERCIAL PICKS UP

BRISBANE'S commercial property market is finally on the mend, but there is still some pain to be had for secondary markets, according to CBRE.

Stephen McNabb, CBRE's head of research, has forecast a gradual improvement to 2020 as the effects of the resources downturn finally wash through the market.

"Overall, we look like we're past the bottom and over the next five years we expect that around 8000 new jobs will be added to the Brisbane market translating to the need for 100,000sqm of office space," McNabb says.

"This feels like a normal level of demand, as opposed to the 40,000sqm to 50,000sqm of demand that we've seen per annum over the past five years."

However, McNabb says that with new supply coming on stream, Brisbane's secondary office market will remain under pressure, with vacancy rates in that tier expected to peak next year at between 20 per cent and 25 per cent, relative to an overall vacancy peak of 19-20 per cent.

CBRE director of capital markets, Flint Davidson, told a briefing this morning that the divergence between Brisbane's prime and secondary office stock continues to widen, with the secondary market to remain challenging.

However, Davidson says private and offshore investors are continuing to actively pursue opportunities in the prime market given Brisbane's current value proposition.

"Normally, you would see a 70-80 basis point spread - or even 100 basis points - between Brisbane investment yields and those in Sydney and Melbourne.

"However, we're currently running at a spread of 150 basis points."

Davidson cites the sale of Waterfront Place, which was pitched at a yield of 6.75 per cent, as opposed to the 5.25-5.5 per cent yield that could be expected on a comparable asset in Sydney.

His expectation is that the yield gap will continue to widen to as much as 200 basis points, based on transactions that are expected to occur in Sydney and Melbourne in the fourth quarter.

"This differential is very attractive for offshore capital, particular for investors who are struggling to compete in Sydney and Melbourne given the current cost of hedging," Davidson says.

The relatively strong performance of Brisbane's fringe office market was another focus of today's presentation, with Davidson forecasting that the fringe would 'surprise on the upside'.


Latest News

APOLLO REVS UP ITS RESULTS

APOLLO Tourism & Leisure (ASX: ATL) has hit its profit forecast in its maiden result as a publicly traded company...

JASMINE YARBROUGH AND TAMIE INGHAM TAKE MARA & MINE TO HOLLYWOOD

MARA & MINE entrepreneurs Jasmine Yarbrough and Tamie Ingham (pictured left and right respectively) slipped in...

HUGE PROFIT SPIKE FOR HELLOWORLD HEALS MERGER WOUNDS

HELLOWORLD (ASX: HLO) gripped the share market this morning after its announcement of a whopping 880 per cent increas...

PROFIT DROP AT SERVCORP

SERVICED office company Servcorp has seen its profit fall, citing New York City, Singapore and Saudi Arabia as the pr...

Related News

WHY EMPLOYEE-OWNED COMPANIES ARE BEATING ASX200 SHARE PRICES

EMPLOYEE-owned companies command a higher share price than their publicly listed peers, reaping a 17 per cent prem...

RISE OF THE MACHINES HAS WORKERS SWEATING

UP TO 3.8 million Australian workers are fearful their job may soon be terminated by a robot, a new survey has shown....

LESS TALK, MORE SMALL BUSINESS ACTION IN 2017

THE future growth and prosperity of Australian SMEs could be undermined if governments lose sight of the sector...

TEST DRIVE A POST GRAD AT BOND

THERE'S only one way to really move your career into the fast lane, says Bond University, and 'test driving...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter