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Downturn the time to lock in cheap rents
COMPANIES are using the economic downturn to lock in cheap rents for the future, with deals for more than 50,000sq m of office space secured in recent weeks in Sydney, Melbourne and Perth central business districts.
It is believed the financial services company State Street is close to signing a deal for about 10,000sqm of space in Sydney's yet-to-be built $280million office tower at 420 George Street.
The company is currently located in the AMP-owned 388 Pitt Street and some staff are also housed in Colonial First State Global Asset Management's $700m Aurora Place building at 88 Phillip Street, which is up for sale.
State Street did not return calls about 420 George Street yesterday, but it is believed an agreement is under consideration for 10,000sqm in the 32-storey complex.
The new Fortius-backed tower is being built by Bovis Lend Lease with a completion date of 2011.
Law firm Minter Ellison, which is in Aurora Place, is believed to have renegotiated a short-term lease to remain in the office tower for a further two to three years.
Among parties shopping for space in Sydney's CBD are law firms Baker & McKenzie, Blake Dawson, and Freehills, with speculation that Freehills may take space at the proposed 40-storey office tower at 163 Castlereagh Street.
It was to be developed by John Boyd Properties but now may have an involvement from Grocon.
Meanwhile, the Australian Curriculum Assessment and Reporting Authority has taken a floor of sublease space from Challenger at 255 Pitt Street. The 1900sqm floor is believed to have an asking rent of about $525sqm, with incentives of more than 30 per cent.
In Melbourne, TRU Energy has renewed its lease on 8000sqm at 285 Bourke St, and engineering firm Sinclair Knight Merz is understood to have secured 12,000sqm of office space at 452 Flinders Street, moving from Armadale in greater Melbourne. The deal was struck directly with landlord Stockland, with the rent believed to be around $350sqm.
Andrew Tracey, national director office leasing for Colliers International Victoria, negotiated leases for engineering firm Parsons Brinckerhoff, to take 5200sqm at Australand's Twenty 8 Freshwater Place office tower on the edge of Southbank.
Chemical company BASF has secured 1750sqm in the same building.
Both rentals were between $385sqm and $390sqm.
Mr Tracey said many tenants were recognising the market was in their favour, with high vacancies in comparison with the boom and competitive rent deals being offered.
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Wow, I guess it is good news for renters, but not so good for owners. Is it still the same in 2012 or it has changed? I am looking to invest in the commercial property and this information would be useful for me.
Last edited by donna; 14-10-2012 at 08:19 AM.
Very little has been built in terms of comm/ind. property compared to what was traditionally being built.
Therefore, demand has continued to increase while supply has stabilised to an extent, forcing rents up. Tenants have less choices, which means owners have to give less incentives to tenants and are demanding longer leases.
Of course this may vary depending on the area you are looking in.
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