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Vol 12. No.10

Landsburys Independent Accreditation Reports

Economic Overview

	Current	+/-	Movement
$AUS/$US	98.69	-0.15
Cash Rate	4.75	Steady
90 Day Bill	4.98	-0.02
10 Year Bond	5.523	+0.035
ASX 200	4763.1	-38.4

Victoria Property

• Communications House located at 189 William Street in Melbourne was acquired in the Christmas/New Year break by Hengyi Australia, a local subsidiary of a Chinese property developer, for $45 million. 
• The building has been vacant for two decades and will be renovated into home offices. 
• The purchaser is pursuing an existing application, put together by Bruce Henderson Architects, to reconfigure the building under the title of West End Market. 
• The project includes developing the lower floors in each building into space for retail, eateries and a supermarket. 
• A new facade will be added along William Street as the upper floors are converted into more than 530 home offices. 
• The apartments range between 40 square metres and 70 square metres, some with balconies.
• Standing on the corner with Little Bourke Street, Communications House was completed in 1966 to house the Postmaster-General’s Department. 
• The agency subsequently split into Australia Post and Telecom Australia, which itself was later privatised and renamed Telstra. 
• In 1994, Telecom moved out and Singaporean billionaire Tay Tee Peng bought the property for $12 million.
• The site has been held ever since through a family company, Memo Corporation. 

National Property

• Large corporate tenants will face competition for high-quality office space, as full-floor vacancy levels drop and demand for space grows. 
• Rising business confidence and a recovery in white-collar employment are expected to put an even greater premium on full-floor spaces. 
• Figures show the number of full floors available in A-grade and prime-grade buildings in Australian capital cities has dipped 13% from the peak levels in September 2009. 
• At the end of November 2010, there were 700 full floors available, down from 788 in September 2009.
• The negative impact the global financial crisis had on office markets has eased during 2010. 
• In Melbourne, full floor vacancy fell 21% to 131 floors and in Sydney it dropped 14% to 284 floors. 
• Perth experienced the sharpest decline of 33%, to 128 floors, as demand from resources and professional services companies spiked. 
• Brisbane’s rate fell 2% to 138 floors and Adelaide’s rose 29% to 49, with new supply added in both markets. 
• New office supply in most areas had been delayed by a lack of funding during the financial crisis; this will lead to substantial rental growth this year and next. 
• The overall office vacancy rate was expected to fall in all CBD markets in the coming year, aside from Brisbane where significant new supply was going to be added to the market. 
• Sydney will experience some space additions this year; however a large amount was pre-committed. 
• Increased demand would lift Sydney and Melbourne rents by 11% and 7% respectively this year with these markets being driven by demand from the financial services, legal and banking sectors. 
• Rents in Perth and Brisbane would likely be flat until 2012, as space additions were absorbed, despite stronger than expected demand for space from resources companies in late 2010.