Low interest rates: what’s the impact on rents?
The surge in owner-occupier transactions isn’t likely to taper any time soon as the gap between paying rent and paying back a loan narrows, thanks to historically low interest rates.
If the trend gathers pace, however, it will put a squeeze on some leasing markets’ already limited stock of premium space.
This in turn heightens competition for the better located properties, putting upward pressure on rents.
Prime rents in Sydney’s west, in particular, are expected to grow in the short to medium term, according to Colliers International’s First-Half 2014 Industrial Report.
In Sydney’s north, leasing demand for properties upwards of 3000 sqm remains weak as tenants are lured west by newer facilities and attractive incentives.
Prime rents in Sydney’s west, in particular, are expected to grow in the short to medium term.
Melbourne’s logistics and distribution sector continues to expand in line with the increased popularity of e-tailing and the need to deliver more online purchases.
While this is good news for landlords of medium-sized facilities, vacancies of facilities greater than 10,000 sqm have increased considerably this half compared with last year.
In Adelaide, a more subdued logistics sector means that the closure of the dominant car manufacturing industry will weigh heavily on industrial vacancies in the north for some time.
Landlords in other parts of the City of Churches can look forward to tighter rents as demand grows in a market with limited premium space.
Brisbane has recorded stable growth in rents in the first half but south of the city they are forecast to accelerate soon as a growing number of developers compete for tenants.
As the mining sector continues to stumble in the west, hard-to-lease spaces are facing spiralling rents. A marked increase in incentives is sign that vacancies are hurting landlords, the Colliers report said.
Petroleum gas puts heat in Perth towers
Iron ore exports may be on the wane, but the outlook for liquid petroleum gas has never looked better if a new lease agreement between Shell and Leighton Properties in Perth is any sign.
The oil giant recently announced it will absorb all the remaining space in the KS2 building under construction at Kings Square. Across 11 levels, the company will occupy more than 19,000 sqm.
Together with Dexus Property Group, Leighton is building another two towers in the King Square precinct. The developers said that pre-commitments across the three buildings are already at 55%.
The first tower being built is expected to be complete mid-2015.
Designs on Melbourne’s south-east
Retail design specialists Popcorn Displays will bring together two separate operations into the one site at 65 Jarrah Drive, Braeside, in Melbourne’s south-east.
Savills Australia says the new, $80,000 lease is for three years with a three-year option.
The recently refurbished property comprises a 1019 sqm warehouse and 152 sqm office.
Beauty nails a new location
The booming beauty services sector knows no bounds, having ventured into the depths of Victoria’s South Gippsland with a new salon at Wonthaggi Plaza.
Fashion Nails & Spa has signed a five-year lease over a 68 sqm shop for $650 per sqm a year, according to Jock Thomson of Savills Australia.
He says there are now just a handful of vacancies available in the popular centre, which is anchored by Coles and Target.
“The Wonthaggi Plaza recorded growth of 10% in the past 12 months driven by a significant population increase on the Bass Coast, which is the state’s fastest growing region,” Mr Thomson says.
Betting on a change of address
Tabcorp will sever its links with Harris St in the Sydney suburb of Ultimo, where the NSW Tab began operating 50 years ago before it was swallowed by the gaming giant.
The betting company is relocating its headquarters later this year to 680 George St in the CBD.
Two operations will be consolidated at the new central address in a modern building that minimises tenants’ environmental footprints with efficient energy features.
