Record year for Commercial Market
Commercial property investments hit a new 12-month high of $27 billion at June 30, according to research compiled by LJ Hooker Commercial.
The total represented a 15% increase on the previous year, and influenced the tightening of yields across most markets, most notably in the office sector.
Indeed, LJ Hooker’s Head of Real Estate Christopher Mourd said office transactions accounted for 59% of sales overall, followed by retail and industrial.
“The last 24 months has seen a real rise in leasing activity, and that has spurred the investment market over the last financial year,’’ said Mr Mourd.
“Significant offshore capital played a role in the record result, but there’s also been a rise of activity on the sub-$10 million market, creating competition at both ends of the investment spectrum.
“Over the next 12 months, the availability of stock will be the telling factor. Already, LJ Hooker Commercial offices are reporting increased interest for off-market deals as buyers act pre-emptively to avoid a competitive marketplace.’’
LJ Hooker Commercial National Research Manager Mathew Tiller said New South Wales and Victoria dominated investment, accounting for 41% and 32% of transactions, respectively.
“But there were also significant purchases outside these key markets and sectors, underpinning the wider appeal of Australia’s commercial sector,’’ said Mr Tiller.
“Brisbane’s Waterfront Place office and retail facility was purchased for $365 million, while a Singaporean REIT purchased the Myer Centre in Adelaide’s Rundle Mall for $288 million.
“And within the industrial sector, the Coles Distribution Centre at Eastern Creek changed hands for $253 million on a yield of just 5.38%.
Influenced by record low interest rates, private investors and developers, particularly operating in the sub-$10 million bracket, had increased their level of activity to now represent 20% of transactions. Conversely, purchases by institutional investors dropped from 52% to 42%.