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Vol 11. No.23

Economic Overview

	Current	+/-	Movement
$AUS/$US	88.71	+0.70
Cash Rate	3.75	Steady
90 Day Bill	4.12	-0.15
10 Year Bond	5.450	+0.015
ASX 200	4647.9	+42.6

NSW Property

343 George Street update (AFR Pg.52)

• Burberry is set to occupy the street level space and additional office space on level 4 of 343 George Street, Sydney on a 15 year lease.
• Burberry currently occupies 129 King Street.
• Virgin Megastore occupies the street level space at 343 George Street in which Burberry plans to move into.

163 Castlereagh update (AFR Pg.51)

• LaSalle Investment Management is believed to be interested in taking a 25% to 50% share in the development of 163 Castlereagh Street, Sydney along with Grocon.
• GPT Group’s wholesale office fund is expected to take a share in the completed tower.
• The 43 level building will be occupied by ANZ, for 15 years, and Freehills.

Sydney office market update (AFR Pg.47)

• Sydney’s CBD office market is experiencing the lowest tenant demand when compared to the major Australian capital cities.
• Figures released by the Property Council of Australia (PCA) show Sydney’s vacancy rate reached 8.1% as at January, the highest level in 4 years.
• Demand expressed as a percentage of supply fell to -3% in the 12 months to December 2009.
• Sydney also faces oversupply issues within the next 2 years as 130,000m² of space is expected to come onto the market this year.
• Tenant pre-commitment levels for 2010 are 14%.
• Vacancy levels across North Shore markets increased to 13.7% from 11.9%.
• The vacancy rate in Crows Nest and St Leonards increased to 15.2%, the highest levels in 5 years.

Sydney office leasing update (AFR Pg.46)

• JPMorgan is expected to make 2 moves within Westfield owned buildings.
• The first move will be into the former Australian Tax Office tower which is currently being refurbished at 100 Market Street, Sydney. They will then move again into 25,000m² of space in the Pitt Street Mall redevelopment at 85 Castlereagh Street.
• The deal is said to include a 25% incentive and a rent of more than $800/m².
• ASIC will also take more than half of the space at 100 Market Street.
• On completion of the Pitt Street Mall towers Westfield will have more than 70,000m² of office space in the Sydney CBD.

Ingleburn industrial sale (AFR Pg.53)

• An industrial complex at 5 Benson Road, Ingleburn has been purchased by an owner occupier for $6.5 million.
• Improvements to the 20,000m² ($325/m²) site include 6,000m² ($1,083/m²) of building space and 10,000m² of hardstand.

Granville showroom sale (AFR Pg.53)

• Neville Crichton has purchased a purpose built Mercedes-Benz showroom at 312-326 Church Street, Granville for $9.8 million ($1,607/m²).
• Improvements total 6,100m² and include a showroom, office space and parking for 70 cars.

Queensland Property

Brisbane office market update (AFR Pg.49)

• According to the PCA, the Brisbane CBD vacancy rate increased by 0.6% in the 6 months to January to 11.3%, a 15 year high.
• The absorption rate for new space in 2009 was 3 times the long-term average.
• In 2009 prime effective CBD rents declined 31% with moderate falls expected in 2010.
• Three projects are under construction within Brisbane.
• 123 Albert Street (38,000m²) is due for completion this year. Rio Tinto will occupy the majority of space.
• GPT’s OneOneOne Eagle Street (63,000m²) has no pre-commitments and is due for completion in 2011.
• King George Central at 145 Ann Street is due for completion in 2012 and has a 65% pre-commitment.

Victoria Property

Melbourne office market update (AFR Pg.48)

• Incentives within Melbourne’s office market at November reached more than 20%.  Now incentives have declined to 15% to 20% leading to pressure on net effective rents.
• According to the PCA, Melbourne’s office vacancy rate in January was 6.6%.
• Rents for A-Grade CBD office space are forecast to increase 6% by the end of the year from $345/m² to $365/m² - $370/m² due to the lack of supply coming on line over the next 2 years.
• The vacancy rate in Docklands has fallen from 3.7% to 2.3% over the last 6 months.
• The new supply developed over the last 6 months has increased total office stock in the Melbourne CBD to 4,000,000m².

Clive Peeters Bayswater sale (AFR Pg.53)

• A private investor has purchased an office/warehouse at 289-313 Bayswater Road, Bayswater for $9.6 million ($654/m²) on a 9.4% yield.
• Improvements to the 1.469 ha site include 3 interconnecting warehouses, a 2 storey office area and parking for 120 cars.
• The property is leased to the vendor, Clive Peeters, for 10 years with an annual rent of $94,473.

Glen Waverley sale (AFR pg.53)

• A corner site at 643-645 High Street, Glen Waverley has sold at auction for $2.775 million ($1,542/m²) on a 6.38% yield.
• The 1,800m² site is leased to Super Cheap Auto.

Coburg sales (AFR Pg.53)

• Two industrial properties at 146 Sussex Street, Coburg have sold.
• Lot 1 sold for $4.125 million to an owner occupier.  The corner site is 9,282m² ($444/m²) and has 6,116m² ($674/m²) of modern improvements.
• Lot 2 sold for $2.2 million to a developer and comprises 8,908m² ($247/m²) of land and an 6,210m² ($354/m²) older style warehouse. The new owner plans on building a showroom, warehouses and a café. The existing facility will be subdivided into warehouse units.

National Property

New home sales update (AFR Pg.57)

• According to the Housing Industry of Australia raw land sales in the 2009 September quarter were up 33% on the same period in 2008.
• The national median price of raw land rose 5.7% over the quarter to $181,158.

Devine update (AFR Pg.52)

• Devine Ltd has sold more than 1,100 lots and 700 house and land packages in the first 6 months of 2009/10.

National office market update (AFR Pg.46)

• Figures released by the PCA show the national office vacancy rate as at January at 8%.
• More than 560,000m² of space is due in the coming 6 months, the largest amount of supply since 1992.
• The weakest office market outside capital cities was the Gold Coast which had a vacancy rate of 22%.
• Nationally sublease space is at 1.7%, the highest level since 1994.