Melbourne, 6 April
had a record year of transactional activity in 2013, surpassing the previous
high of 2010.
investment activity reached around $3.5 billion in 2013, with $1.1 billion of
that coming from Q4 CBD sales alone.
to CBRE’s latest Office MarketView report, competition for good quality
investments was high. Major sales included
735 Collins Street to CIMB-TCA for $279 million, 367 Collins Street to Mirvac
for $228 million and 485 La Trobe Street to Lend Lease via Australian Prime
Property Fund Commerical for $182 million.
During Q4, 2013, indicative prime yields
firmed five basis points to average 6.85%. Secondary yields firmed ten basis
points to 7.95% with improved interest from buyers willing to move up the risk
Claire Cupitt, CBRE’s Associate Director of
said CBRE was seeing high levels of interest from overseas
developers, particularly Asian, looking to convert office towers into
we expect demand to remain strong from prime grade offices in the CBD, the full
impact of the challenging leasing environment, high incentives and growing
vacancy is expected to be felt in the short term. These offsetting factors
should place a break on the further firming of average yields this year,” said
the near city markets, interest still remains high in the St Kilda
Road market, with one large transaction in the quarter – 420 St Kilda Road
which sold to Chip Eng Seng for $45.3 million. Prime and secondary yields
remain unchanged for the quarter at 8.30% and 8.70% respectively.
Southbank saw one major transaction, as 158
City Road was sold to a mainland Chinese developer for $22.5 million with a
permit for a 43-level apartment developer comprising 449 apartments.
“This sale demonstrates the appetite for
residential development sites within the precinct.”
The suburban market saw nine assets change
hands in Q4, totalling $97 million. The largest sale was 200 Victoria Street,
Carlton for $33.6 million in Impact Investment Group.
“We expect investor interest in Melbourne’s
suburban office market to continue on 2014 with an improved willingness to move
up the risk curve to secondary grade stock with development and/or
Investment Activity, Melbourne
the office leasing market, Melbourne’s CBD vacancy rate fell from 9.8% in July 2013 to 8.7% in January 2014. This was largely due to
withdrawals of stock for refurbishment or residential conversion rather than a
The CBD recorded just 857sqm of net absorption
over 2013, although the Docklands precinct performed well, with 97,961sqm of
net absorption over the year. This was due to several corporate companies
consolidating their operations including NAB, Marsh Mercer and CBA.
a result of consolidation and contraction mandates, sublease space continues to
impact the market. The report estimates 77,392sqm of sublease space is
available as of December 2013. The Finance & Insurance, IT & Government
and Education & Health sectors account for 64% of the total supply of
the St Kilda Road and Southbank markets, there is no new supply in the
pipeline. In fact, due to a number of sites being earmarked for residential
development, vacancy levels should ease as these developments commence and
office stock is withdrawn.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website atwww.cbre.com.au.