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RESEARCH
Investment volumes across the
North Shore markets totalled $2.14
billion, with over 80% of capital
coming from offshore buyers in the
12 months to January 2019.
North Sydney awaits the completion
of over 145,000 sq m of new office
space, which will bolster absorption
levels and deliver new entrants to
the market over the next two years.
Gross face rents in North Sydney
continued to rise in conjunction with
falling incentives over the past 12
months. The short term supply drought
will see rental growth remain strong.
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RESEARCH NORTH SHORE OFFICE MARCH 2019
Source of Map: Knight Frank
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Source of Map: Knight Frank
North Sydney Macquarie Park/North Ryde
100 Mount St - 40,600m² [NBN Co]^ 45-61 Waterloo Road - Bld C - 35,000m² [GPNSW] 11-17 Khartoum Rd - 52,000m²
Dexus - Q2 2019 - 85% committed John Holland - Q4 2019 - 70% committed Stockland - Mooted
1 Denison St - 65,021m² [Nine Entertainment]# Stage 2 97 Waterloo Rd -15,000m² [Schneider] Epicentre at Riverside, 6-8 Julius Ave - 34,194m²
Winten Property - H2 2020 - 50% committed Goodman - H2 2020 ISPT - Mooted
118 Mount St - 21,000m² [Zurich] 39 Delhi Rd - 30,000m² 45-61 Waterloo Road Bld - A,B,D,E,F - 82,000m²
Zurich - H2 2020 - 75% committed Stockland - Mooted John Holland - Mooted
73 Miller Street - 19,000m² 1 Rivett Rd (Stage 2) - 11,380m²
ProeprtyLink - H1 2020 Pathway Property - Mooted
396 Lane Cove Rd - 76,100m²
Crows Nest/St Leonards Frasers Property / Winten Property Group - Mooted
472-486 Pacific Hwy - 4,600m2 29-35 Epping Rd -14,500m²
Mirvac - Q4 2019 Harvey Norman Holdings - Mooted
7 RNS Hospital site - 25,000 m² [NSW Govt. 100%] 271 Lane Cove Rd - c.34,000m²
NSW Government - H12021 Mirvac - Mooted
88 Christie St (Fronting Pacific Hwy) - 17,000m²** 8-10 University Ave - c.50,000m² *
JQZ - 2020+ Macquarie University - Early Feasibility
Lot 3, Broadcast Way, Artarmon - 14,000m² >
DA Approved Site
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Over 145,000 sq m of new and refurbished office stock in North
Sydney is set to come online over
the next two years, with 50%
already pre-committed this expected to increase over the next
six months.
St Leonards recorded its highest six monthly absorption rate since
2006, with 11,512 sq m of positive
net absorption recorded over the
six month period to January 2019.
Prime and secondary markets in Chatswood recorded net effective
rental growth of 12.1% and 9.5%
respectively over the past 12
months.
Macquarie Park recorded its lowest overall vacancy rate since
2005 of 4.8%, down from 5.6%,
six months prior.
Record development activity Although no new supply was added to
the North Sydney market in 2018, the
precinct is transforming. Over the next
two years, the 145,000 sq m of
commercial works currently in the
pipeline is due to reach completion. The
three major projects under construction;
100 Mount Street (41,600 sq m, 85%
pre-committed to NBN Co and Laing
O’Rourke - Q2 2019), 1 Denison Street
(65,021 sq m, 30% pre-committed to
Nine Entertainment and SAP - Mid
2020) and 118 Mount Street (21,000 sq
m, 75% pre-committed to Zurich—Late
2020).
In addition to new development,
landlords are repositioning existing
assets with major refurbishment plans
also underway. 73 Miller Street (15,000
sq m) is expected to be withdrawn from
mid-2019 to undergo a full
refurbishment, including an expansion in
its office floor area to 17,500 sq m when
it comes back online from mid-2020.
The refurbishment will see major tenant
NSW Department of Health relocate to
100 Christie Street in St Leonards on a
short-term lease.
TABLE 1
North Shore Office Market Indicators as at January 2019
Market Grade
Total
Stock
(sq m)^
Vacancy
Rate
(%)^
Annual Net
Absorption
(sq m)^
Avg Net
Face Rent
($/sq m)
Outgoings
($/sq m)
Average
Incentive
(%)*
Core Market
Yield (%)
North Sydney Prime 262,215 3.5 12,781 792 133 21.4 4.75 - 5.50
North Sydney Secondary 547,215 8.3 -16,867 653 129 19.9 5.25 - 5.50
North Sydney Total Market 809,430 6.8 -4,086 698 131 20.4 4.75 - 5.50
Crows Nest/St Leonards Prime 102,699 1.9 14,187 596 130 21.3 5.25 - 6.00
Crows Nest/St Leonards Secondary 204,182 8.2 415 540 105 22.3 5.75 - 6.25
Crows Nest/St Leonards Total Market 306,881 6.1 14,602 559 118 21.9 5.25 - 6.25
Chatswood Prime 157,412 3.9 4,000 539 128 21.3 5.25 - 6.00
Chatswood Secondary 121,507 9.1 -2,355 470 107 22.0 5.50 - 6.00
Chatswood Total Market 278,919 6.2 1,645 509 119 21.6 5.25 - 6.25
Macquarie Park Prime 644,824 3.5 3,582 398 100 22.0‡ 5.75 - 6.00
Macquarie Park Secondary 214,210 8.7 725 335 100 20.0‡ 6.00 - 6.50
Macquarie Park/North Ryde Total Market 859,034 4.8 4,307 382 100 21.5‡ 5.75 - 6.50
Source: Knight Frank Research/PCA * Incentives are on a Gross basis ‡ Incentives are on a Net basis ^ As at January 2019
Note. Average data is on a weighted basis. Yield ranges reflect the average lower and upper yields for a select basket of office assets in each market and grade
Grade: Prime includes modern and A-Grade stock whilst Secondary includes B, C and D quality Grade.
Senior Analyst
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Gross Supply Withdrawals Net Supply
The boom in new developments over the
coming two years represents the largest
supply addition over any two year period
for the North Sydney market. The last
record period was between 2009 and
2010 when 78,000 sq m was added.
Although new supply will see a short-
term rise in backfill space, it is expected
to be a drawcard for tenants relocating
from neighbouring North Shore markets
and the Sydney CBD.
FIGURE 1
North Sydney Office Supply Per six month period (000’ sq m)
Source: Knight Frank Research/PCA
4
RESEARCH NORTH SHORE OFFICE MARCH 2019
(5,600 sq m), Nine Entertainment (15,500
sq m), NBN (20,000 sqm), Lang O’Rouke
(4,600 sq m) and Zurich (15,750 sq m),
there are a number of large tenant
mandates in the market that will have
positive implications for absorption levels
over the next 24 months. Tenants
currently seeking options in North Sydney
include Ooh Media (5,000 sq m), UGL
Group (7,500 sq m), Microsoft (10,000 sq
m) and Fairfax Media (5,000 sq m).
Vacancy remains below historical average The North Sydney overall vacancy rate
increased slightly in the six months to
January 2019 from a 16 year low of 6.3%
to 6.8%. Tenant relocation and negative
absorption over the second half of 2018
has underpinned the uptick in vacancy.
Whilst vacancy has increased, it is still
182bps below the 10-year average of
8.6%.
In the prime market, vacancy levels
increased from 2.1% to 3.5% in the six
months to January 2019. Within the prime
market, Premium Grade vacancy has
climbed from 1.9% to 6.0%, although this
has stemmed soley from sublease
vacancy. Similar to premium grade
vacancy, available sublease space has
increased A Grade vacancy rate by 90bps
to 3.1%, as at January 2019. The
secondary market however remained
static with vacancy unchanged at 8.3%.
Looking ahead, with the strong absorption
levels on the horizon and current level of
large tenant enquiry we anticipate overall
vacancy to trend towards 6% over the
next twelve months before incoming new
supply in 2021 results in a slight upswing
in the headline rate.
Tenant relocations temper absorption levels Absorption levels across the North
Sydney market in the six months to
January 2019 measured negative 4,644
sq m, resulting in negative absorption
annually of 4,086 sq m. Whilst the first
half of 2018 saw strong absorption levels
in the prime market of 16,347 sq m, this
was not the case in the second half of
2018 with negative absorption of 3,566
sq m, which primarily stemmed from
MasterCard vacating its largest North
Sydney office at 100 Arthur Street and
relocating to 72 Christie Street, St
Leonards.
In the secondary market negative
absorption levels were recorded for the
sixth consecutive period, with absorption
totaling negative 1,078 sq m for the six
months to January 2019. The negative
absorption levels continue to be driven
by the withdrawals of stock for
alternative uses. The withdrawal of 160
Pacific Highway (1,000 sq m) for
residential conversion, in addition to
MasterCard vacating its second (smaller)
office location in North Sydney at 165
Walker Street, were the catalyst for the
inflated negative absorption over the
period.
Pre-commitments to bolster future absorption New supply over the next two years will
see over 145,000 sq m added across
four developments. The level of pre-
commitment has already reached 50%
and based on current demand levels,
potentially could be fully committed prior
to practical completion. In addition to
the major pre-commitments from SAP
FIGURE 4
Average Core Market Yields North Sydney
Source: Knight Frank Research Source: Knight Frank Research/PCA Source: Knight Frank Research
Rental growth continues Low prime vacancy in North Sydney, in
conjunction with office rents running at a
28% (gross basis) discount to the
Sydney CBD, has underpinned prime
rental growth. Average prime gross face
rents have increased by 4.7% over the
past year to $925/sq m ($792/ sq m net
face) as at January 2019. In addition,
average prime incentives dropped 160
bps to 21.4%, resulting in gross effective
rental growth of 8.6% YoY.
In the secondary market, average gross
face rents have risen by 5.5% YoY to
$782/sq m ($653/sq m net face) as at
January 2019. Average secondary
incentives have dropped from 22% to 19
-20% YoY, as at January 2019, boosting
gross effective rents by 8.3% to measure
$626/sq m.
Record level of investment Investment volumes into the North
Sydney office market in 2018 reached
the highest level in a decade with $1.58
billion transacting, a 90% increase on
2017 volumes. This was driven mainly by
offshore capital, accounting for 92% of
total volumes.
The strong investment volumes and
confidence in the North Sydney market
has fuelled yield compression. As at
January 2019, prime assets in North
Sydney average 5.10%, 34bps lower
than 12 months prior. The yield spread
between prime Sydney CBD and North
Sydney has compressed to just 52bps.
Secondary market yields currently range
between 5.25% to 5.50%. This has
resulted in a prime and secondary yield
spread of just 20bps.
FIGURE 3
Average Gross Face Rents Prime & Secondary, North Sydney
4.5%
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AVG PRIME YIELD AVG SECONDARY YIELD
PRIME 10Y AVG SEC 10Y AVG
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PRIME SECONDARY
Forecast
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NET ABSORPTION (SIX MONTHS TO) VACANCY RATE (RHS)
Forecast
FIGURE 2
North Sydney Net Absorption & Vacancy Per six month period (000’s sq m, %)
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in the first half of 2018, we understand
that more than half of this has now been
leased, including three floors to Hireup.
Lowest prime vacancy rate on the north shore Above-average absorption of prime
space is creating a two-tiered market
dynamic between prime and secondary,
which is being reflected in the individual
vacancy rates. Prime vacancy
experienced its largest decline in 15
years, falling from 14.8% in July 2018 to
1.9% in January 2019. While secondary
vacancy has risen to 8.2% over the same
period, up from 7.4% in July 2018, it is
still well below its long-run historical
average of 11%.
Rental growth accelerating Given the level of new demand and
declining vacancy rate recently, there has
been strong rental growth over the past
12 months. Average prime gross face
rents have increased 7.9% to $726/sq m
and secondary gross face rents have
increased 4.8% to $645/sq m over the 12
months to January 2019. With prime
incentives falling from 24.5% a year ago
to 21.3%, net effective rents have surged
15.2% YoY to $442/sq m.
In the secondary market, net face rents
increased 5.1% YoY to measure $540/sq
m as at January 2019. Incentives have
dropped by 240bps to average 22.3%.
This resulted in net effective rental growth
of 10.7% YoY to $396/sq m.
Yields continue to firm As a January 2019, average prime yields
range between 5.50% and 6.00%,
representing a 45 bps compression over
the previous 12 months. Secondary
market yields average 5.75% to 6.25%,
representing a 50bps compression on the
same time last year.
Property Bank Australia divested 154
Pacific Highway in June 2018, a B grade
10-storey tower on a 6.0% core market
yield. The sale recorded a rate of
$9,367/sq m highlighting the strong
demand for secondary assets along this
corridor.
72 Christie Street has recently sold for
$157.55 million to UOL Group, a
Singaporean listed property company, on
a core market yield of 5.0% and a record
rate per square metre of $13,993 for the
precinct. The building previously sold in
2017, was repositioned by Proprium
Capital Partners last year after securing
MasterCard as the new anchor tenant on
a 10-year lease.
FIGURE 5
Net Absorption & Vacancy Per six month period (000’s sq m, %)
Source: Knight Frank Research/PCA
FIGURE 7
Average Prime Core Market Yields Prime & Secondary, Crows Nest/St Leonards
Source: Knight Frank Research
FIGURE 6
Average Gross Face Rents Prime & Secondary ($/sq m)
4%
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PRIME SECONDARY
Source: Knight Frank Research
New tenant demand underpins absorption trend In contrast to the mid-2000s, recent
absorption has been demand led, not
supply led, with take-up of existing prime
space driving down the headline vacancy
rate to 6.6% (as at January 2019), down
from 11.1% at the same time last year.
11,512 sq m of positive net absorption
was recorded over the six month period
to January 2019, the highest six monthly
absorption rate since January 2006.
Leasing absorption trends were led by
MasterCard securing 11,259 sq m at 72
Christie Street to consolidate staff from
their Rozelle and North Sydney offices.
While low prime vacancy (1.9%) is limiting
tenant options, particularly for contiguous
space, there has been a notable increase
in new demand for the precinct which
bodes well for future development plans.
HammondCare, have secured two floors
in 207 Pacific Highway, will be relocating
shortly from the Sydney CBD. Only About
Children also secured 1,300 sq m at 207
Pacific Highway, relocating from
McMahons Point last year, expanding
their footprint in the move. More recently,
Virgin Active has pre-committed to lease
a full floor (c1,200 sq m) in the two-tower
St Leonards Square development at 472
Pacific Highway when completed later
this year.
Clemenger BBDO has relocated from 120
Pacific Highway to Walsh Bay, leaving
behind c5,100 sq m of backfill space.
While this partially offset absorption gains
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PRIME SECONDARY
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NET ABSORPTION 6 Mths to… (m²) - LHS TOTAL VACANCY (%) - RHS
Forecast000's
6
RESEARCH NORTH SHORE OFFICE MARCH 2019
As at January 2019, the office vacancy rate
measured 6.2%, down from 6.8% a year
prior, which has been driven by positive
yearly absorption of 1,645 sq m. In the
prime market specifically, vacancy has
tightened to its lowest level since 2007,
declining from 6.5% to 3.9% in the 12
months to January 2019. Looking ahead,
with no supply in the pipeline, the
Chatswood vacancy rate is forecast to
trend towards 5.5% by mid-2020.
Strong net effective rental growth Recent rental growth in Chatswood has
been relatively firm given the reducing
vacancy rate and continued office demand.
The wider context of a supply constrained
CBD market and a tight prime market in
North Sydney are adding to the local
market momentum in Chatswood.
In the 12 months to January 2019, average
prime gross face rents increased by 5.9%
to $667/sq m ($539/sq m net). With prime
incentives falling from 24.3% a year ago to
21.3%, prime net effective rents have
grown significantly by 12.1% YoY. Prime
rents are forecast to continue to grow
strongly over the next 12 months, with a
further 6% in face rental growth
anticipated. Similar rental growth is being
experienced in the secondary market with
gross face rents up 5.5% over the year to
$577/sq m ($470/sq m net). On a net
effective basis, rental growth of 9.5% YoY
has been recorded with secondary
incentives falling to 22% (from 24.2% a
year ago).
Rental growth is forecast to continue over
the next two years in anticipation of the
stage 1 metro opening in mid 2019
followed by stage 2 in 2024 providing
increased connectivity to the Sydney CBD.
Solid investment activity With no traction in the first half of 2018,
investment activity in Chatswood finished
strongly at the back end of 2018,
recording $338.7 million in office sales
across three assets, almost doubling the
2017 transaction volumes of $170 million.
Two of Chatswood’s major office buildings
transacted at the end of 2018; 67 Albert
Street purchased by Mapletree for $158
million on a core market yield of 5.69%
and 465 Victoria Avenue acquired by
Centuria Metropolitan REIT for $166.50
million on a core market yield of 5.75%.
More recently, Chatswood’s trophy asset,
The Zenith at 821 Pacific Highway has
come to market. Boasting over 44,000 sq
m of prime office space, the asset is fully
leased on a 4.3 year WALE.
Yields reach tightest level on record
After compressing a further 52bps over the
12 months to January 2019, prime office
assets are trading well under 6% and at a
level that has not been seen before in this
market, reflecting Chatswood’s tightly held
status. The strong rental growth profile of
Chatswood, coupled with its relative value
in comparison to other major CBD
markets, has made it an attractive
destination for investors.
Positive tenant demand
The pent-up demand for office space in
Chatswood has resulted in positive net
absorption of 1,645 sq m in the 12 months
to January 2019. By grade, the prime
market recorded positive absorption of
4,000 sq m over 2018. However, in the
secondary market negative absorption of
2,355 sq m was recorded in the 12 months
to January 2019. Positive absorption in the
prime market stemmed from the lack of
prime grade leasing options in conjunction
with limited availability of efficient
contiguous floor plates.
Tenant demand and leasing activity have
been diverse over the last 12 months with
lease deals done across a range of
different sectors. Of the observed lease
deals over the period, 37% have been in
the Public Administration and Safety
sector including Sydney North Health
Network (923 sqm at 475 Victoria Avenue).
Professional services (27%) and Health
care and social assistance (14%)
represented the next largest share of lease
deals over the 12 months to January 2019.
Demand driven fall in vacancy
Over the past two years, the Chatswood
office market has experienced a demand
driven fall in vacancy. Positive absorption
has been recorded throughout the past
four half year reporting periods,
underscored by a steady flow of lease
deals.
FIGURE 8
Chatswood Net Absorption & Vacancy Per six month period (000’s sq m, %)
Source: Knight Frank Research/PCA
FIGURE 9
Average Gross Face Rents Prime & Secondary, Chatswood ($/sq m)
Source: Knight Frank Research
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NET ABSORPTION 6 Mths to… (m²) - LHS TOTAL VACANCY (%) - RHS
Forecast000's
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PRIME SECONDARY
Forecast
Chatswood Lease Deals By Size Bracket —2018
0-500
36%
501-1000
23%
1001-2500
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FIGURE 11
Macquarie Park/North Ryde Net Absorption
& Vacancy Per six month period (000’s sq m, %)
FIGURE 12
A-Grade Net Rents & Incentives Macquarie Park/North Ryde, Prime
Source: Knight Frank Research Source: Knight Frank Research/PCA
John Holland secured a 3.2ha site in 2017
as part of the Government’s asset
recycling program that could deliver
c117,000 sq m of office space to
Macquarie Park. With a pre-commitment
(leaseback) to the State Government for
25,000 sq m and an option to take further
space, the first stage of the development
is currently underway with practical
completion expected in Q1 2020.
Additionally, more than 130,000 sq m of
new office space is mooted pending
development approval and/or tenant pre-
commitments, including Macquarie
University’s Innovation Hub (50,000 sq m)
and the Frasers/Winten site, formerly
known as the Dick Smith site, at 396 Lane
Cove Road (staged up to 76,100 sq m).
Vacancy still at record low The headline vacancy rate has declined
for the third consecutive six month period
dropping from 5.4% in July 2018 to 4.8%
in January 2019, primarily due to stock
withdrawals. This is the lowest headline
vacancy rate recorded in Macquarie Park
since 2005 and well below its long-term
average of 9.0%.
Prime demand benefits secondary rents While strong take-up in the first half of
2018 saw above-average gross face rental
growth, the rate of growth has begun to
ease back, with no movement in average
prime rents over the last two quarters.
Low prime availability limits absorption Macquarie Park recorded negative net
absorption of 3,754sq m in the six
months to January 2019, mostly due to
the withdrawal of 10,000sq m of
secondary space at 112 Talavera Road
for residential conversion.
Tenant demand has tempered relative to
the first half of 2018 when 8,061 sq m
was absorbed. Some contraction has
occurred on the back of tenants putting
expansion/relocation plans on hold due
to a lower availability of prime options to
lease. As a result, prime vacancy has
barely shifted in six months to January,
moving from 3.4% to 3.5%, to maintain
its lowest vacancy rate since tracking
began in 2005.
While the scope of prime space available
to lease, especially for larger tenant
requirements, is beginning to limit the
flight to quality trend within the precinct,
it bodes well for developer confidence on
future projects seeking pre-commitment.
Pent-up tenant demand for prime could fuel pipeline Schneider Electric has plans to
consolidate multiple sites into a new
building in Macquarie Park and has pre-
committed c7,000 sq m of the stage 2
Goodman development at 97 Waterloo
Road (15,000 sq m), which will
commence construction by mid 2019.
On an annual basis (to Jan-19), average
prime gross face rents have grown 4.2%
to $498/sq m ($398/sq m net face).
Average prime incentives have declined
from 23-24% net to c22% over the year.
In the secondary market, average gross
face rents increased 2.6% YoY to $435/
sq m ($335/sq m net face) and the
average incentive decreased from 25%
net in January 2018 to c20% in January
2019. On a building by building
proposition there appear to have been
greater reductions in average secondary
incentives due to shortage of prime
space and potentially, an increase in
renewal activity as tenants have limited
options in the short-term.
Investment volumes buoyed by $231.2m Dexus sale The low level of investment volumes
during 2018 has been indicative of the
tightly held nature of Macquarie Park/
North Ryde against its North Shore
counterparts. However, in February 2019,
Dexus announced that it had sold a
100% interest in the campus style three
building office asset at 11 Talavera Road
off-market for $231.2 million, a slight
premium to its December book value.
The transaction, which is due to settle in
June 2019, is the largest recorded since
Singapore’s AIMS AMP Capital Industrial
REIT acquired a half stake in Optus
Centre in 2013 for $184.4 million.
Prior to this, the last transaction in the
precinct was in June 2017, when
Goodman sold the newly built 8
Khartoum Road office building to Ogen
Nominees, a local investor, for $93.5
million on a reported yield of 5.5%.
Goodman also acquired 56-58 Waterloo
Road in 2017 for $40.5 million. The
property was previously owned and
occupied by Novartis Pharmaceutical
who relocated next door and the property
is now fully leased to Macquarie
University.
As at January 2019, average prime yields
range between 5.75% and 6.00%,
representing a 25 bps tightening over the
previous 12 months. Secondary market
yields range from 6.00% to 6.50%,
representing a 50bps compression on
the same time last year.
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
-30
-20
-10
0
10
20
30
40
50
60
70
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
Jan-1
4
Jan-1
5
Jan-1
6
Jan-1
7
Jan-1
8
Jan-1
9
Jan-2
0
Jan-2
1
NET ABSORPTION 6 Mths to… (m²) - LHS TOTAL VACANCY (%) - RHS
Forecast
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0
50
100
150
200
250
300
350
Jan
-09
Jan
-10
Jan
-11
Jan
-12
Jan
-13
Jan
-14
Jan
-15
Jan
-16
Jan
-17
Jan
-18
Jan
-19
Jan
-20
Jan
-21
INCENTIVE % (RHS) NET EFFECTIVE RENT
8
RESEARCH
TABLE 2
Recent Leasing Activity North Shore and Macquarie Park
Address Region Area (m²) Face Rent
Net ($/m²)
Term
(yrs) Lease Type Tenant Start Date
118 Mount Street North Sydney 16,000 770 10+5+5 Pre-comm Zurich Financial Nov-20
40 Mount Street North Sydney 8,100 U/D 10 Renewal Coca Cola Amatil Jul-20
1 Denison Street North Sydney 5,600 750 10 Pre-comm SAP Jan-21
1 Denison Street North Sydney 15,500 U/D 12 Pre-comm Nine Entertainment H2 2020
472 Pacific Highway St Leonards 1,200 770 10 New Virgin Active Dec-19
203 Pacific Highway St Leonards 3,500 620 10 Renewal Cardno Sep-19
205 Pacific Highway St Leonards 1,324 580 5 New Next Media Apr-19
50 Miller Street North Sydney 4,100 U/D 12 New WeWork Apr-19
67 Albert Street Chatswood 139 575 5 New FirstPharma Dec-18
475 Victoria Avenue Chatswood 240 550 5 New Shiji Nov-18
3 Richardson Place Macquarie Park 156 315 5 New Swift Computers Oct-18
76 Berry Street North Sydney 1,046 670 5+5 New Microfocus Oct-18
NORTH SHORE OFFICE MARCH 2019
TABLE 3
Recent Sales Activity North Shore
Address Region Price
($ mil)
Core
Market
Yield (%)
NLA (m²) $/m²
NLA
WALE
(Yrs) Vendor Purchaser
Sale
Date
40 Mount Street (50%)* North Sydney 226.5 5.00 28,552 15,873 6.7 National Pension
Service
M&G Real Estate JV
ICPF Dec-18
72 Christie Street St Leonards 157.5 5.00 11,259 13,993 9.7 Proprium Capital
Partners UOL Group Dec-18
67 Albert Avenue^ Chatswood 158.0 5.69 15,180 10,707 3.4 CorVal Mapletree
Investment Nov-18
465 Victoria Avenue- Chatswood 166.5 5.75 15,158 10,646 5.0 Hines Centuria Oct-18
80 Mount Street North Sydney 71.0 5.42 6,204 11,444 2.0 PropertyLink CKK Enterprises Sep-18
154 Pacific Highway St Leonards 60.20 6.0 6,427 9,367 2.1 Property Bank Aust. NSW Farmers May-18
100 Miller Street (50%) North Sydney 300.0 4.73 26,967# 16,249 3.4 Redefine Global Early Light Int. May-18
Source: Knight Frank Research n refers net g refers gross # office component only ^Leasehold - Part of Portfolio
*M&G Real Estate acquired a 25% stake in the asset whilst the Investa Commercial Office Fund acquired a further 25% stake in the building to increase its interest from 50% to 75%.
Knight Frank Research provides strategic advice, consultancy services and forecasting
to a wide range of clients worldwide including developers, investors, funding
organisations, corporate institutions and the public sector. All our clients recognise the
need for expert independent advice customised to their specific needs.
Knight Frank Research Reports are available at KnightFrank.com.au/Research
© Knight Frank 2019 This report is published for general information only. Although high standards have been used in
the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be
accepted by Knight Frank Research or Knight Frank for any loss or damage resultant from the contents of this
document. As a general report, this material does not necessarily represent the view of Knight Frank in relation to
particular properties or projects. Reproduction of this report in whole or in part is not permitted without prior consent of,
and proper reference to Knight Frank Research.
Definition:
Core Market Yield: The percentage return/yield analysed when the assessed fully leased net market
income is divided by the adopted value/price which has been adjusted to account for property
specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure,
current vacancies, incentives, etc).
RESEARCH
Ben Burston
Partner, Head of Research and Consulting
+61 2 9036 6756
Katy Dean
Associate Director
+61 2 9036 6612
[email protected] Marco Mascitelli
Senior Analyst
+61 2 9036 6656
NSW
Angus Klem
Partner, Head of North Sydney
+61 2 9028 1110
OFFICE LEASING
David Howson
Partner, Head of Office Leasing, Australia
+61 2 9036 6697
Giuseppe Ruberto
Partner, Head of Office Leasing, North
Sydney
+61 2 9028 1115
[email protected] Steve Clapham
Director, Office Leasing
+61 2 9028 1117
CAPITAL MARKETS
Tyler Talbot
Partner, Institutional Sales, Sydney Metro
+61 2 9028 1148
Arland Domingo
Director - Metropolitan Sales
+61 2 9028 1122
Paul Roberts
Partner, Joint Head of Institutional Sales,
Australia
+61 2 9036 6872
[email protected] Ben Schubert
Partner, Joint Head of Institutional Sales,
Australia
+61 2 9036 6870
Graeme Russell
Partner, Institutional Sales, Australia
+61 2 9036 6618
Melbourne CBD Office
Market Overview
March 2019
Active Capital View
Outlook 2019 Student Housing
2018 Sydney CBD Office
Market Overview
March 2019