04 February 2015 –Office
sales activity in suburban Melbourne almost doubled in 2014, with $709 million
in deals transacted according to a new CBRE market review.
The bumper sales tally well
outstripped the $365 million in sales recorded in 2013, with investors
attracted to the strengthening market fundamentals in key suburban locations.
CBRE Director, City Fringe &
Metropolitan Investments, Justin Clarkson said 28 significant transactions over
$5 million had occurred last year – including four sales over $40 million.
“To have such a high number of $40
million+ suburban sales is highly unusual and highlights the strong interest in
the suburban market from a broad range of investor types,” Mr Clarkson said.
“Groups with metropolitan funds have
been actively circling for suburban opportunities, among them Centuria, GPT,
360 Capital and Eureka. However, these institutional investors had been largely
outbid by private investors, particularly in the sub $40 million price bracket.
The private investor dominance was
highlighted by the $96.75 million sale of the Bennelong Property Group
portfolio, with all three assets acquired by separate private buyers.
“Traditionally the high net worth
private investor has dominated the suburban office investment landscape and
2014 confirmed this,” Mr Clarkson said.
“This was particularly evident in the
Bennelong transaction, with the private buyers able to provide deal certainty
by bidding unconditionally.”
there were some exceptions, as highlighted by 360 Capital’s $46.5 million
acquisition of B8 at 576 Swan Street, Richmond. This was one of the top four
biggest individual sales alongside 60 Broughman Street, Geelong ($95.8m); 109
Burwood Road, Hawthorn ($63m); and 6 - 22 Gladstone Street, Moonee Ponds ($83
Syndicators were also active,
transacting four deals throughout the year.
CBRE’s review highlights that the
weight of capital chasing opportunities, combined with the limited availability
of quality stock, led to a tightening in suburban office yields in 2014.
This was particularly evident in the
inner east, with CBRE’s review highlighting that yields in the precinct have firmed
44 basis points over the past 12 months and 107 points in the past two years.
“We anticipate that market demand will
remain strong this year, with some funds expected to become increasingly
aggressive, having missed out on opportunities during 2014,” Mr Clarkson said.
“Investor confidence will be
underpinned by signs of renewed tenancy demand, as has been evidenced in the
leasing interest being shown in 8 Redfern Road, Hawthorn.”
For Australian/international news or global stories, follow us on Twitter.
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.