Commercial Property Outlook
Transcript of Commercial Property Outlook
Commercial Property Where to from here?
Outlook
Andrew Ballantyne
Director – Research & Consulting
28 September 2011
Commercial Property Overview
1. Office Market
2. Retail Market
3. Industrial Market
Office Market Overview
Office
0%
5%
10%
15%
20%
25%
30%
35%
Sydney Melbourne Brisbane Perth Adelaide Canberra
Vaca
ncy
Rate
70s Peak 80s Peak 90s Peak 00s Peak Q2 2011
Source: Jones Lang LaSalle Research
Back to the fundamentals National CBD Office Markets Vacancy Rates
Prime Gross Effective Rent Outlook
Office Sector
As at Q2/2011
(AUD /sqm p.a. )
Q/Q (%) Y/Y (%) 2010 to
2013
CAGR
2013 to 2016
CAGR
Sydney CBD 572 1.3 5.2 9.2 3.3
Melbourne CBD 413 1.0 4.1 6.5 1.5
Brisbane CBD 457 0.0 -3.6 3.3 7.7
Adelaide CBD 358 2.2 9.4 3.5 2.1
Perth CBD 691 3.9 10.9 6.4 2.2
Canberra 338 -0.2 -0.8 -1.9 5.8
Source: Jones Lang LaSalle Research
Office rents were growing solidly in most markets
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Sqm
0%
3%
6%
9%
12%
15%
Vac
ancy
Rat
e
Completions Under Construction Assumption Vacancy Rate
Source: Jones Lang LaSalle Research
Is there a risk to the 2014-15 assumptions? Melbourne CBD Completions, 2004 to 2015
Under Construction = 252,000 sqm
Retail Market Overview
0%
2%
4%
6%
8%
10%
Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11
Sto
res
Vac
ant
CBD Regional Sub-Regional Neighbourhood
Vacancy rates remain below the long-term average National Retail Vacancy Rates, 2002 to 2011
Source: Jones Lang LaSalle Research
4.1%2.0%CBD
4.8%
3.3%
1.4%
National Average
Neighbourhood
Sub-Regional
Regional
6.0%
1.5%
0.9%
Melbourne
4.1%2.0%CBD
4.8%
3.3%
1.4%
National Average
Neighbourhood
Sub-Regional
Regional
6.0%
1.5%
0.9%
Melbourne
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Sqm
Regional Sub-Regional Neighbourhood CBD Bulky Goods
Note: Only includes projects under construction
Source: Jones Lang LaSalle Research
Supply is concentrated in the bulky goods sector Melbourne Retail Completions, 2004 to 2013
Market Overview
Industrial
0
200
400
600
800
1000
2004 2005 2006 2007 2008 2009 2010 2011 2012
'000
Sqm
North West South East Fringe Gross Take-Up
Speculative development has achieved leasing success Melbourne Industrial Market Completions & Take-Up, 2004 to 2012
Note: Only includes projects under construction
Source: Jones Lang LaSalle Research
Prime Net Rent Outlook
Industrial Sector
Current
(AUD /sqm p.a. )
Q/Q (%) Y/Y (%) 2010 to
2013
CAGR
Sydney (S) 146 0.0 4.7 2.9
Sydney (OCW) 106 1.7 4.2 3.2
Melbourne (S.E) 80 0.1 5.5 3.0
Melbourne (W) 69 0.0 1.5 2.3
Brisbane (S) 112 0.0 2.1 2.7
Perth (E) 138 1.9 10.9 5.5
Adelaide (NW) 85 1.9 0.0 2.0
Source: Jones Lang LaSalle Research
Rents have generally returned to growth
Conclusions
• Market fundamentals should be creating more development interest
- Escalation in financial market volatility and sovereign debt issues will delay tenant decision-
making
• Finance constraints means development will be demand-led
• A development cycle delayed not cancelled
- Low levels of spare capacity across most Australian office markets.
- Industrial development will remain tenant-led
- Retail supply is very focused on specific retailers & growth corridors
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without prior written approval from Jones Lang LaSalle. This document has been produced solely
as a general guide and does not constitute advice. Whilst the document has been prepared in
good faith and with due care, no representation is made for the accuracy of the whole or any part of
the document. Jones Lang LaSalle accepts no liability for damages suffered by any party resulting
from their use of this document.
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