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Vol 11. No.9

Economic Overview

	Current	+/-	Movement
$AUS/$US	92.26	-0.61
Cash Rate	3.75	Steady
90 Day Bill	4.22	+0.04
10 Year Bond	5.525	-0.105
ASX 200	4868.1	-31.4

NSW Property

Sydney office market update (AFR Pg.38)

• Demand for Sydney CBD office space has softened due to diminished corporate overheads.  Incentives have reached more than 30%.
• Million-dollar fit-outs are being offered and sublease space is available at a significant discount.
• Within Chifley Tower rents in November were $650/m² well down on the $1,000/m² achieved in boom times. Approximately 10% of the building is available for sublease.
• RGA leased more than 1,500m² on level 23 in Grosvenor Place on an incentive of 30%.
• Brookfield Multiplex leased 3,600m² at 135 King Street also on an incentive of 30%.
• Opportunistic tenants currently seeking space include Susquehanna International Group of Companies, who currently occupy the top level of Chifley Tower, and Goldman Sachs who are seeking 6,000m².

Victoria Property

Melbourne office market update (AFR Pg.39)

• A previous forecast for Melbourne’s commercial vacancy rate to top 8% in 2010 has been revised downwards.
• Space requirements include NAB (40,000m²), BHP Billiton (12,000m²) and Melbourne Water (10,000m²).
• Face rents for A-grade space on a rate per square metre ranges from $375 to “mid $400s”.  Rents are expected to rise approximately 10%.
• Incentives which are currently at 20% are forecast to decline.

East Melbourne commercial sale (AFR Pg.39)

• A division of the Harmony Group, a property syndicate, has purchased Becton Property Group’s head office on Wellington Parade South in East Melbourne for $27 million ($4,821/m²) on an estimated yield of 8.5%.
• The fully leased 5 storey building has a NLA of 5,600m² and an estimated net income of $2.3 million.
• The average face rents in the building are approximately $350/m².

The ATO’s new Melbourne building (AFR Pg.37)

• Lang Walker and the Kuok Group will construct a 38,000m² office tower for the Australian Tax Office at 735 Collins Street in Melbourne’s Docklands precinct.
• The building is the first stage of a $750 million multi-building project. Commercial office space for the entire Village Docklands project will total 136,000m².
• The ATO will consolidate 4 offices into the one building following the original 25,000m² requirement .
• Within a few months Mr Walker will commence marketing a $95 million residential building comprising 216 studio and 1 bedroom apartments on the Docklands site.

National Property

Tralee development update (AFR Pg.37)

• Village Building Company (VBC) will push ahead with Tralee a 4,685 housing lot development at South Jerrabomberra despite the Land & Environment Court ruling against the current rezoning process.
• VBC commented that the Land & Environment Court found the Department of Planning’s certificate to Queanbeyan Council to exhibit the LEP for South Tralee was technically invalid. A draft regulation has been signed by the NSW Planning Minister and is awaiting signoff by the governor in council.
• The site is the closest residential land to Canberra and Queanbeyan and will comprise 130 ha of commercial land.
• A nearby development for 5,500 lots at Googong proposed by Canberra Investment Corporation was signed off by the NSW government on Christmas Eve.