Metropolitan Office Market Analysis - 1231 Sandgate Road, Nundah QLD - Centuria Capital
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
HTTPS://ANZ.COLLIERSHUB.COM/TEAMS/RESOURCES/STOCKIMAGES/AUSTRALIAN%20CITIES%20AND% 20MAPS/BRISBANE/SHUTTERSTOCK_194247017.JPG 21 April 2017 Report for Centuria Property Funds Limited Metropolitan Office Market Analysis 1231 Sandgate Road, Nundah QLD
Craig Clayworth Carl Knaggs David Skerrett National Director, Valuations Director, Consultancy Associate Director, Consultancy Colliers International Colliers International Colliers International Level 30, One One One Level 30, One One One Level 30, One One One 111 Eagle Street, Brisbane 111 Eagle Street, Brisbane 111 Eagle Street, Brisbane Direct +61 7 3370 1724 Direct +61 7 3370 1728 Direct +61 7 3370 1730 Mobile + 61 423 828 236 Mobile + 61 416 765 636 Mobile +61 452 335 483 craig.clayworth@colliers.com carl.knaggs@colliers.com david.skerrett@colliers.com Lynn Johnsen Sophie Tieman Senior Consultant, Consultancy Assistant Valuer, Valuations Colliers International Colliers International Level 30, One One One Level 30, One One One 111 Eagle Street, Brisbane 111 Eagle Street, Brisbane Direct +61 7 3370 1793 Direct +61 7 3370 1725 Mobile +61 431 268 203 Mobile +61 401 884 167 lynn.johnsen@colliers.com sophie.tieman@colliers.com Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD
Contents 01 INTRODUCTION 1 02 KEY FINDINGS 3 03 LOCATIONAL ANALYSIS - NUNDAH 3.1 Locational Profile 6 3.2 Demographic Pofile 9 04 ASSET OVERVIEW 4.1 Site Details 13 4.2 Building Characteristics 13 4.3 Tenants 14 4.4 SWOT Analysis 14 05 BRISBANE OFFICE MARKET OVERVIEW 5.1 Brisbane CBD Office Markets 16 5.2 Brisbane Fringe Office Markets 18 5.3 North Brisbane Metropolitan Office Market 21 5.4 Competitive Analysis 25 5.5 Indicative Leasing Strategy (Hypothetical Scenario) 27 Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD
INTRODUCTION Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD
01 Introduction
The purpose of this report is to provide a detailed overview
of the Brisbane metropolitan office market as it relates to
Centuria’s purchase of 1231 Sandgate Road, Nundah.
Introduction
Colliers International Consultancy Pty Ltd (Colliers) has been commissioned by Centuria Property Funds Limited
(Centuria) to undertake an analysis of the Brisbane office market as it relates to the purchase of 1231 Sandgate
Road, Nundah (Property).
Purpose
The purpose of this report is to provide market research and commentary for Centuria which sets out the following:
Locational characteristics of Nundah;
Asset overview;
An overview of the Brisbane office markets and specifically Brisbane CBD, Inner-City and North Brisbane
Office markets;
Competitor analysis including recent metropolitan office deals (leasing);
Hypothetical leasing strategy; and
Summary findings about current office market environment.
Assumptions
In undertaking this analysis, we have been instructed by Centuria and have based and relied on the following broad
assumptions in preparing this report:
That the Property is fully tenanted with a WALE of 9.4 years (as at 1 July 2017);
The analysis provided is general in nature and is based on Colliers International market knowledge and does
not reflect any special considerations or circumstances; and
The market information provided is current as at the time it is written.
In the event that any of the above assumptions are incorrect or have changed then it is requested that Colliers
International be notified in writing, as it could change the scope and services rendered to the client.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 1
KEY FINDINGS Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 2
02 Key Findings
Key Findings
Summary
Colliers International considers that the Property:
› is of an A Grade metropolitan office standard and is superior to anything that is currently available in the
Nundah, Brisbane Airport, Hamilton and Chermside locations.
› is well located and has good access to high frequency rail and bus public transport options;
› has good access to major road networks including Sandgate Road, Gateway Motorway and Airport Link Tunnel
and is within 15mins drive of the Brisbane CBD;
› has favourable locational characteristics and amenity including being next door to the Nundah Village
Shopping Centre and within 700m radius from the Mirvac owned Toombul shopping centre;
› has large flexible floor plates and good natural light and would likely appeal to a variety of tenant types who
have larger flexible floor space requirements.
A breakdown of the relevant findings (by category) are shown below.
Location
Nundah is well located approximately 8km north east of the Brisbane CBD.
Nundah is serviced by high frequency train and bus services.
Nundah is proximate to the Brisbane Airport, Airport Link Tunnel and Gateway Motorway and within 15mins drive
of the Brisbane CBD.
Nundah provides good amenity with supporting retail and food and beverage offerings in the Woolworths
anchored Nundah Village shopping centre as well as being proximate to Toombul shopping centre which was
recently acquired by Mirvac. There are also a number of educational facilities (primary and secondary schools)
within a 700m radius of the building.
Socio-Demographic
According to Queensland Treasury, the estimated resident population of Nundah (SA2) was 11,816 persons as
at 30 June 2015 and has showed an average annual growth rate 2.2% over the 5 years to 2015 and 3.5% over
10 years which is higher than the Brisbane average of 1.6% and 1.8% respectively over the same periods.
Asset
The Property is a high quality 5 Star Green Star designed (v3) ‘A’ Grade Metro Office Building, comprising 144
secure basement car parking, ground floor retail accommodation, mezzanine retail accommodation and six upper
levels of office accommodation. The building currently has a strong 4.5 Star NABERS Energy and 4.5 Star
NABERS Water rating.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 3 The Property provides 10,224 square metres of A Grade office space accommodation. The large floor plates
range in sizes of up to 2,150 square metres and offer good natural light and flexibility for tenant requirements.
The high car parking ratio and end of trip facilities are also positives for the building.
The Property is close to passenger rail services at Nundah station and has a vibrant amenity offering in and
around the Nundah Village shopping centre for food and dining and other services.
Office Market
Nundah falls within the North Brisbane Metropolitan Office Market. Currently, the North Brisbane Metropolitan
Office Market is performing better than the overall Brisbane Fringe market, with an assessed vacancy rate of
8.81% versus 12.60%. This is likely to be due to the limited supply within the North Brisbane Office Market,
locational characteristics and access to public transport, roads and the airport.
New supply in the North Brisbane markets, particularly the Urban Renewal areas, has moderated in the last 3
years and there has been below trend levels of supply. Currently only 900 Ann Street, Fortitude Valley (which is
100% committed to Aurizon) and Lendlease’s K5 in the RNA Showgrounds are under construction.
Any new office development will be demand led and subject to high tenant pre-commitment levels and incentives,
particularly for the Brisbane Airport, Hamilton and Chermside Precincts. This is likely to keep new competing office
supply in the short-to-medium term constrained, and will underpin current rental levels and future growth, should
white collar growth improve as forecasted.
Competitive Analysis
In terms of competition, Colliers considers that the Property is of a superior A Grade office quality to anything that
is currently available in Nundah, Brisbane Airport, Hamilton and Chermside.
The most comparable product to the Nundah Property is the larger format, A Grade premises available in Fortitude
Valley/Newstead (Urban Renewal precinct), where gross face rentals of $520 - $600/m2 are achievable.
Leasing
Whilst the Property is fully tenanted, on a hypothetical leasing basis, the building design and configuration would
appeal and support tenants whom:
› have larger flexible floor space requirements (i.e multi-floor or whole floor occupiers);
› who do not require a CBD presence;
› have a north Brisbane locational requirement; and/or
› require proximity to major road, passenger rail services, airport and port infrastructure and access to the CBD.
On a hypothetical leasing basis, Colliers International considers that the Property may appeal to the following
tenant types:
› State or Federal Government- e.g ATO, Department of Education etc.
› Semi Government Tenants – e.g Energex, Ergon
› Large engineering and civil contractors – e.g Aecom, Golding, Clough
› Mining/ Energy Companies
› Travel or Airport Related Companies – e.g Virgin Australia, Flight Centre, Boeing
› Banking, Superannuation and Insurance groups – e.g Bank of Queensland, Sunsuper, Allianz
› Education and Training Providers
› IT and Telecommunication companies
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 4LOCATIONAL ANALYSIS - NUNDAH Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 5
03 Locational Analysis -
Nundah
Nundah is located approximately 8km
north east of the Brisbane CBD.
3.1 Locational Profile
Location
The Site is located centrally within Nundah which is approximately 8km radially north east of the Brisbane CBD.
Figure 1 – Location Map
Nundah
Brisbane Airport
Gateway
Brisbane CBD Motorway
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 6Figure 2 – Site in context of surrounding uses/activities
Nundah Train
Station
Subject Site
Nundah State
School (Primary)
Nundah Village
Shopping Centre
St Joseph’s Mary Mackillop
Nundah (Primary) College (Secondary)
700m radius
Toombul Train
Station
Toombul Shopping
Centre (Mirvac)
Airport Link Tunnel Entrance/Exit (Road)
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 7Figure 3 – Nundah Suburb Boundary Map Access and Movement Nundah is connected by road and rail, which are the primary modes of transport. The bus network provides secondary transport access to Nundah. Road Sandgate Road is the primary north/south connector which runs through the centre of Nundah and carries an average annual daily traffic count of 40,600 cars (DTMR, 2014). There is an underground bypass (Nundah bypass) which directs primary through traffic underneath the Nundah primary business area (which includes the area at which the subject site is located). The eastern boundary of Nundah is Southern Cross Way which is an off-shoot connector of the Gateway Motorway. The southern boundary of Nundah is the entry/exit tunnel to the Airport Link Tunnel which connects through to Bowen Hills and CBD and other major road tunnels (Clem 7 to the south and Legacy Way to the west). Rail Nundah contains two train stations Toombul station (opposite Toombul shopping centre) and Nundah station (adjacent to the Property), which are six stops from Brisbane Central rail station. Commercial Activity Centres The two primary commercial centres within Nundah are the areas around the Nundah Village shopping centre and the subject site and the Toombul shopping centre to the south. Nundah Village is a Woolworth’s anchored neighbourhood centre that directly adjoins the Property. Toombul shopping centre comprises 44,000sqm of retail and is located on a 10Ha development and was purchased by Mirvac in 2016 for $228m. Toombul is anchored by Coles, Kmart, Target, Aldi and Bunnings. Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 8
3.2 Demographic Profile
Population and Growth
According to Queensland Treasury, the estimated resident population of Nundah (SA2) was 11,816 persons as at
30 June 2015 and has showed an average annual growth rate of 2.2% over the 5 years to 2015 and 3.5% over 10
years as compared to the Brisbane average of 1.6% and 1.8% respectively over the same periods.
According to Queensland Government Population Projections, the average annual population growth rate of Nundah
from 2011 through to 2036 is forecasted at 1.3%.
Locality 2011 2016 2021 2026 2031 2036 Average Annual
Growth (2011-2036)
Projected Population
Nundah (SA2) 10,896 11,930 12,927 13,720 14,537 15,064 1.3%
From a demographic perspective, 43% of the resident population is within the 25-44 year age cohort as compared
to 33% across the Brisbane LGA.
Household Income and Size
According to the ABS, the median total personal household income is approximately 10% higher in Nundah than the
Brisbane median, however the total family income is about 5% lower.
Region Median Total Personal Median Total Family Median Mortgage Average Household
Income ($/month) Income ($/month) Repayment Size (people)
($/month)
Nundah $3,056 $7,092 $2,031 2.0
Brisbane $2,784 $7,492 $2,100 2.6
Employment
According to the ABS, the largest proportion of employed persons within Nundah was in the Health Care and Social
Assistance category at nearly 12%.
Top 5 Employment by Industry Classification Nundah SA2
(% of employed persons)
1. Health Care and Social Assistance 11.6%
2. Professional, Scientific and Technical Services 10%
3. Public Administration and Safety 9.2%
4. Transport, Postal and Warehousing 8.4%
5. Retail Trade 8.3%
In terms of employment by occupation, the largest proportion of people employed were identified as professionals
at nearly 27% and clerical and administrative workers at 19.2% of the working population.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 9Residential Sales and Median Dwelling Price
According to Core Logic, there were 410 sales transactions in Nundah in the 12 months to 31January 2017 with a
median dwelling price of $470,000.
Houses made up around 30% (120) of all sales and had a median sales price of $651,000 and units comprised 52%
(213) of all sales and had a median of $468,000 over the period. The balance of sales transactions related to
commercial, land or unspecified property types.
Building Approvals
According to the ABS, there were 405 residential dwelling approvals in the 12 months to 31 January 2017. Of these
building approvals, 384 (95%) were for dwellings other than detached houses (e.g apartments).
Figure 4 – Nundah Socio-Demographic Profile – Census 2011
Nundah SA2 Greater Brisbane Queensland
Population and Households
Total Persons 10,400 2,066,000 4,319,300
Average Annual Income
Per Household $89,600 $94,100 $86,800
Per Capita $43,900 $35,600 $33,700
Age Distribution (%)
0-14 12.1 20.1 20.3
15-24 14.6 14.5 13.6
25-44 40.6 29.6 27.9
45-64 21.6 24.1 25.2
65+ 11.1 11.7 13.1
Employment (%)
In Labour Force 75.2 68.5 66.9
Unemployed 4.9 5.9 6.0
White Collar Occupations 75.0 70.4 66.6
Employed per Household 1.2 1.3 1.2
Dwelling Structure (%)
Detached 31.8 79.1 78.6
Semi-detached 12.0 8.6 8.4
Flats/Units 56.1 11.7 11.8
Other 0.1 0.7 1.3
Dwelling Tenure (%)
Owner 18.0 27.9 29.7
Purchaser 26.8 37.6 35.4
Renter 54.7 33.7 34.0
Mobility (%)
No Car 15.3 8.0 7.4
1 Car 49.0 36.4 36.5
2+ Cars 35.7 55.6 56.1
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 10Education (%)
Bachelors Degree 20.6 15.8 12.8
Grad Dip./Grad Cert. 2.5 1.9 1.6
Postgraduate Degree 5.3 4.2 3.0
Household Type (%)
Couples with Children 16.6 32.8 31.0
Couples without Children 24.0 27.0 28.6
Single Parent Household 8.8 11.8 11.6
Lone Person Household 38.3 21.8 22.8
Group/Other Household 12.3 6.7 5.9
Ethnicity (%)
Only English spoken at home 82.1 86.1 89.7
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 11ASSET OVERVIEW Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 12
04 Asset Overview
4.1 Site Details
Based on our preliminary desktop searches, the Property comprises the following:
1231 Sandgate Road, Nundah Lot Description Lot 1 on SP245049
Land Area 5,597m2
NLA Office – 10,224m2
Retail – 2,757m2
Total 12,981m2
Road Frontages Sandgate Road – 42m (approx.)
Aspinall Street – 78m (approx.)
Carparks 144 car spaces
Major Tenants Energex – 8,755m2
Powerlink – 1,469m2
Go Health Clubs – 2,017m2
4.2 Building Characteristics
The subject Property forms part of the Circa Nundah mixed use development and is bound by Sandgate Road and
Aspinall Street, within the suburb of Nundah, approximately 9.1 kilometres (by road) north of the Brisbane General
Post Office (GPO).
The Property is a 5 Star Green Star designed (v3) ‘A’ Grade Office Building, comprising secure basement car parking,
ground floor building entry, lift foyer and retail accommodation, mezzanine retail accommodation and six upper levels
of office accommodation. The Property currently has a 4.5 Star NABERS Energy and 4.5 Star NABERS Water rating.
The Property provides secure basement parking for approximately 144 cars, 2,757 square metres of ground floor
and mezzanine retail accommodation and 10,224 square metres of upper level A Grade office accommodation. The
floor plates of the upper level office accommodation range in size up to 2,150 square metres and have been designed
around a central service core and internal light atrium.
Ancillary improvements include storage facilities, end of trip amenities and bicycle storage within the basement,
additional public male and female ground floor toilet amenities and on site landscaping.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 134.3 Tenants
The Property is underpinned by leases to Energex Limited (69.13%), Powerlink Queensland (11.60%) and Go Health
Clubs (15.93%) by area.
Tenancy Details
No. of Tenants: 12 Average Lease Duration 7.07 years
Major Tenants Weighted Lease Duration (Area) 9.48 years
Energex Limited 8,755.00 m² Weighted Lease Duration (Income) 9.34 years
Powerlink Queensland 1,469.00 m² Current Vacancy: 0.00%
Go Health Clubs 2,017.00 m²
Nundah Village Dental 204.00 m² Major Tenant Composition by Area
Edo Australia Pty Ltd (Sushi Edo) 113.00 m² Remainder of
Tenanted NLA;
3.34%
Remainder of Tenanted NLA 423.00 m² Go Health
Clubs; 15.93%
Vacant NLA -
Total NLA 12,981.00 m²
Powerlink
Queensland;
11.60%
Energex
Limited;
69.13%
4.4 SWOT Analysis
Strengths Weaknesses
High quality building with long-term Government Central atrium and open nature, will not appeal to all
leases. tenants, if the building was to be multi let in the future.
Proximity to major road and passenger rail Lower ground floor retail less desirable to tenants.
infrastructure.
Established surrounding retail amenity.
Large format floor plates with good natural light and
suburban CBD views (on the upper levels).
Access to Brisbane Airport and Port of Brisbane and
15 min drive from the Brisbane CBD via Airport Link
Tunnel.
Approximately 9.1 km from the Brisbane General Post
Office.
Opportunities Threats
Continued residential growth in and around Nundah. Development of competing facilities in the medium to
In terms of quality office accommodation, there is no long term including office park/campus style
current competition and limited future competition in developments.
Nundah and Chermside. Changes in structural configuration preferences to
office workspace environments, i.e. reduction of floor
space demand in the future.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 14BRISBANE OFFICE MARKET OVERVIEW Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 15
05 Brisbane Office Market
Overview
An office market analysis has been
undertaken which considers the relevant
Brisbane office markets.
Office Market Overview - Brisbane
The overall Brisbane office market is the third largest office market in Australia, and comprises the Central Business
District (CBD), adjacent fringe office precincts and major metropolitan centres, such as Chermside and Upper Mt
Gravatt.
Figure 4– Relevant Brisbane Office Markets
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 165.1 Brisbane CBD Office Markets
Key Indicators
Key Market Indicators – CBD Market (Property Council of Australia – Office Market Report)
Jul-16 Jan-17 % Change
Stock (m2) 2,261,878 2,280,055 0.8%
Vacancy (m2) 381,427 349,556 -8.36%
Vacancy (%) 16.9% 15.3% -
Annual Net Absorption (m2) 43,230 94,601 118.83%
New Supply (m2) 115,134 75,853 -34.12%
Market Overview
The Brisbane CBD office market is the largest and most established office market in Queensland. It comprises four
major office precincts, including: Financial Precinct (Golden Triangle), Government Precinct, Retail Precinct and
North Quarter, as well as the minor Midtown and Uptown transition areas.
The Brisbane CBD office market has increased by 30% over the 10 years to January 2017. The majority of stock can
be currently classified (according to the PCA), as either A Grade (40%) or B Grade (33%).
Brisbane CBD Stock Levels (sqm)
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Premium A-Grade B-Grade C-Grade D-Grade
Grade
According to the Property Council of Australia (PCA) the Brisbane CBD office vacancy rate declined from 16.9% in
July 2016 to sit at 15.3% as at January 2017. This is the first downward movement in vacancy since July 2015.
Contributing to the decline, premium grade vacancy fell from 21.1% in July 2016 to sit at 12.2% as at January 2017.
Similarly, A grade office vacancy also declined from 13.9% to 11.9% over the same period. In contrast, vacancy for
secondary grade stock B and C grades both increased over the period with both siting at just under 20% as at January
2017.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 17Looking forward, we anticipate prime vacancy to decrease gradually in the short term as tenants seek to upgrade
their office accommodation, driven by high incentives and low effective rents on offer. Our forecasts show that
vacancy is not likely to lift again until the middle of 2019 when 300 George Street is anticipated for completion
(assuming a 30% pre-commitment at time of completion).
Rental Forecast
A protracted period of soft fundamentals in the leasing market led to a steady continuance in high incentives for both
prime and secondary space during the first half of FY2017, albeit underpinning prevailing gross rental levels. We
expect forecast white collar growth to drive demand for office space over the next three years, reducing vacancy and
support conditions suitable for rental growth in the medium term.
5.2 Brisbane Fringe Office Markets
Key Indicators
Key Market Indicators – Brisbane Overall Fringe Market (Property Council of Australia Office Market Report)
Jul-16 Jan-17 % Change
Stock (m2) 1,195,287 1,209,374 1.2%
Vacancy (m2) 154,625 152,177 -1.58%
Vacancy (%) 12.9% 12.6% -
Annual Net Absorption (m2) -6,378 15,462 342.43%
New Supply (m2) 0 23,800 -
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 18Market Overview
The Brisbane Fringe Office Market comprises five distinct precincts, Urban Renewal, Inner South, Milton, Spring Hill
and Toowong, and now provides a critical mass of office supply and amenity, which is a genuine alternative to the
CBD. Assets within the Brisbane Fringe are characterised for having large floor plates, more affordable market rents
than the CBD, high car parking ratios and green building credentials. Despite wavering economic conditions,
Brisbane’s Fringe office market has remained resilient with the overall vacancy rate, according to the Property Council
of Australia, falling over the last six months from 12.9% in July 2016 to sit at 12.6% as at January 2017. Additionally,
vacancy for A-Grade stock over this period fell from 11.6% to 11.2%.
Brisbane Fringe Stock Levels (sqm)
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
A-Grade B-Grade C-Grade D-Grade
The below graph shows vacancy for each Fringe precinct for July 2016 and January 2017. Both Inner South and
Spring Hill experienced an increase in vacancy with the remainder precincts all recording a decline. The Brisbane
Fringe office vacancy rate at 12.6% still sits below that of the Brisbane CBD office market at 15.3% as at January
2017 and is expected to improve with a low future supply pipeline and increasing white collar demand.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 19Brisbane Fringe Office Vacancy by Grade (%)
Jul-16 Vs Jan-17
30%
25%
20%
15%
10%
5%
0%
A-Grade B-Grade C-Grade D-Grade
Jul-16 Jan-17
Source: PCA OMR, Jan-17
Brisbane Fringe Office Vacancy by Precinct (%)
Jul-16 Vs Jan-17
25%
20%
15%
10%
5%
0%
Inner South Milton Spring Hill Toowong Urban Renewal
Jul-16 Jan-17
Source: PCA OMR, Jan-17
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 205.3 North Brisbane Metropolitan Office Market
The North Brisbane Metropolitan Office Market comprises the following areas:
Urban Renewal Areas (Fortitude Valley, Bowen Hills, Newstead),
Hamilton Northshore,
Brisbane Airport; and
Chermside.
Nundah is within the North Brisbane Metropolitan market.
1. Urban Renewal (Fortitude Valley, Newstead and Bowen Hills)
Urban Renewal – Key Market Indicators (Property Council of Australia – Office Market Report)
Jul-16 Jan-17 % Change
Stock (m2) 484,156 480,726 -0.71%
Vacancy (m2) 50,284 47,672 -5.2%
Vacancy (%) 10.4% 9.9% -
New Supply (m2) 0 0 0
The Urban Renewal precinct skirts the northern side of the Brisbane River to the east of the CBD comprising the
suburbs of New Farm, Teneriffe, Fortitude Valley, Bowen Hills and Newstead. The precinct is more geographically
dispersed than other large office markets such as Milton and Spring Hill and is located approximately 2-4km from
Brisbane’s CBD.
This precinct has grown substantially over the last decade with significant new A grade office developments along
with greater amenity and better car parking ratios enticing major corporates to relocate from Brisbane’s CBD and
other fringe precincts.
In terms of transport options, Fortitude Valley and Bowen Hills are both connected by train however it is noted that
much of the office accommodation in Bowen Hills and Newstead in particular is located a significant distance from
the train stations.
2. Chermside
Chermside – Key Market Indicators (Property Council of Australia – Office Market Report)
Jul-15 Jan-16 % Change
Stock (m2) 34,298 34,298 0%
Vacancy (m2) 3,111 2,928 -5.9%
Vacancy (%) 9.1% 8.5% -
New Supply (m2) 0 0 0
Chermside is identified as a major suburban business centre located approximately 12 km’s from the CBD and
dominated by Westfield Chermside, one of the largest shopping centres in Australia. Office accommodation/stock
within this precinct is limited and primarily comprises the ATO complex and older style B Grade office developments.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 213. Hamilton (Hamilton Northshore)
Hamilton – Key Market Indicators (Property Council of Australia – Office Market Report)
Jul-16 Jan-17 % Change
Stock (m2) 22,962 22,962 0%
Vacancy (m2) 3,204 2,019 -37%
Vacancy (%) 13.9% 8.8% -
New Supply (m2) 0 0 0
Located 6 kilometres radially from the Brisbane CBD, Hamilton (comprising BTP Northshore) is a significant urban
waterfront redevelopment project which covers 304 hectares of former industrial and port land along the Brisbane River.
The majority of Hamilton Northshore is to be developed for residential and mixed use retail and leisure and
entertainment activities.
BTP Northshore Hamilton is an office park development within the Hamilton Northshore project and will provide
approximately 140,000 sqm of commercial office space, in close proximity to the Australia Trade Coast, Brisbane Airport
and CBD.
Hamilton Northshore whilst an emerging precinct currently lacks retail amenity and support services and has only limited
public transport options.
Office accommodation within this precinct is primarily made up of ‘design and construct’ developments with smaller
format floor plates and high levels of on-site car parking.
4. Brisbane Airport
Brisbane Airport – Key Market Indicators (Property Council of Australia – Office Market Report)
Jul-16 Jan-17 % Change
Stock (m2) 78,284 78,284 0%
Vacancy (m2) 1,702 1,702 0%
Vacancy (%) 2.2% 2.2% -
New Supply (m2) 0 0 0%
Brisbane Airport is 9 km’s radially from the Brisbane CBD and is the third busiest airport by aircraft movements in
Australia. From 2014-2020 the airport is undergoing the biggest aviation project in Australia, with the development
of a 3.3km long and 60m wide runway located west of and parallel to the existing runway. With additional taxiways,
navigational aids, airfield infrastructure and hundreds of hectares of airfield landscaping, this will give Brisbane the
best runway system in the country.
Brisbane Airport Corporation (‘BAC’) operates, manages and develops the Brisbane Airport under the terms of a 50
+ 49 year lease acquired from the Commonwealth Government when it privatised Brisbane Airport in July 1997. BAC
presently holds investment property assets with a market value in excess of $1 billion. Brisbane Airport occupies a
surveyed area of 2,687 hectares within the Australia Trade Coast Precinct.
Office accommodation within this precinct is primarily made up of modern ‘design and construct’ developments which
largely appeal to aviation, freight and logistics and government tenants. The majority of buildings comprise office and
warehouse style space. Development within the confines of Brisbane Airport is guided by the Brisbane Airport Master
Plan 2014.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 225. North Brisbane Metropolitan Office Market - Summary
Brisbane Northern Metropolitan Office Indicators (Property Council of Australia – Office Market Report)
TOTAL STOCK (sqm)
TOTAL Northern
Brisbane Fringe Urban Renewal Brisbane Airport Hamilton Chermside Metro.
Jan-16 1,195,287 484,156 78,284 16,943 34,298 613,681
Jul-16 1,195,287 484,156 78,284 22,962 34,298 619,700
Jan-17 1,209,374 480,726 78,284 22,962 34,298 616,270
Vacancy
North Brisbane Metropolitan Office Indicators (Property Council of Australia – Office Market Report)
TOTAL VACANCY (%)
TOTAL Northern
Brisbane Fringe Urban Renewal Brisbane Airport Hamilton Chermside Metro.
Jan-16 12.80% 11.20% 2.50% 19.1% 8.50% 10.32%
Jul-16 12.90% 10.40% 2.20% 13.9% 8.50% 9.38%
Jan-17 12.60% 9.90% 2.20% 8.8% 8.50% 8.81%
We note that the North Brisbane Metropolitan Office Market comprises approximately half of the Brisbane Fringe
office market and is currently performing better overall, with an assessed vacancy rate of 8.81% versus 12.60%.
Rental Forecast
Rents in the North Brisbane Metropolitan Office market have stabilised in recent years, albeit with the underpinning
support of market driven incentives, after strong growth through the 2006-08 period. The loss of development ready
land to alternate residential uses, plus high land and incentive costs, have limited office development in the last three
years. Similar to the CBD, we expect forecast white collar growth to drive demand for office space over the next three
years, reducing vacancy and support conditions suitable for rental growth in the medium term.
North Brisbane Metropolitan Office
Gross Face Rents ($/sqm)
Forcast
700
600
500
400
300
200
100
0
Mar-04
Mar-11
Mar-18
Oct-04
May-05
Dec-05
Jul-06
Feb-07
Apr-08
Nov-08
Jun-09
Jan-10
Oct-11
Oct-18
Sep-07
Aug-10
May-12
Dec-12
Jul-13
Feb-14
Apr-15
Sep-14
Nov-15
Jun-16
Jan-17
Aug-17
May-19
Brisbane Fringe Urban Renewal Hamilton Chermside Airport
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 23Future Supply
Brisbane Fringe / Urban Renewal
No new supply additions are anticipated to come online in the Metro markets in 2017. Thereafter there are only two
projects anticipated in 2018 - 900 Ann Street Fortitude Valley a 21,625 sqm office building which is 100% pre-committed
to Aurizon, and K5, located at 50 King Street Bowen Hills, a 14,000 sqm office building which is set to become Australia’s
tallest Cross Laminated Timber (CLT) constructed office building, of which 50 per cent is pre-committed to
Aurecon. Whilst a number of other projects are currently in the pipeline, they are currently mooted at this stage and are
unlikely to proceed unless a significant level of tenant pre-commitment is achieved.
Brisbane Fringe New Office Pipeline
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
900 Ann St K5 RNA K2/K3 11 Breakfast 301 Wickham CDOP 7 Green Square 3 52 Alfred St
Creek Rd
Precomm Remaining Mooted Sublease
Brisbane Airport
Brisbane Airport’s latest commercial development, Five Lobelia Circle which includes commitment by the Australian
Federal Police is now complete. Currently remaining within the building is 425sqm of office located on the top floor.
The Skygate Home and Life Centre is taking shape, with a number of large format retailers expressing interest in
tenancies. The proposed development will be located adjacent to the existing DFO site.
The purpose-built office and laboratory for Hanson Construction Materials will be complete early this year. The building
is the first within the Boulevard Business Park with three remaining campus-style office sites remaining for development.
Hamilton
Puma’ Energy’s $30 million Australian headquarters was recently completed within the project and comprises a four
level A Grade 6,000sqm office building.
Looking forward, the latest addition to the precinct, 375 Macarthur Avenue, is set to open its doors in mid-2017. Also
detailed design works are underway on 381 Macarthur Avenue, a three level, 3,000sqm building with onsite café.
Any future supply is likely to be made up of ‘design and construct’ developments for specific tenants.
Chermside
There is currently only one project planned within Chermside the Wheeler Gardens St Marks Development. The current
proposal to be located at 930-950 Gympie Road, Chermside is a 23,685 sqm office/medical development.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 24Conclusion
New Supply in the North Brisbane Metropolitan markets has moderated in the last 3 years, and has been below trend
levels of supply. Currently only 900 Ann Street, Fortitude Valley (which is 100% committed to Aurizon) and Lend
Lease’s K5 in the RNA Showgrounds (50% committed) are under construction.
Any new development will be demand led and subject to high tenant pre-commitment levels and incentives,
particularly for the Brisbane Airport, Hamilton & Chermside Precincts, and therefore likely to be constrained.
5.4 Competitive Analysis
Competition
In the current office market climate, competition for A-grade and higher quality B-grade metropolitan office space
would be likely to come from the following areas:
Primary Competition
Urban Renewal areas, particularly Newstead, Bowen Hills and Fortitude Valley.
Inner South, including South Brisbane and South Bank.
Hamilton Northshore – large land availability and design and construct options.
Recent North Brisbane Metropolitan Office Leasing Transactions
In assessing a comparable case study for the office component of the subject Property, we have considered a variety
of available rental evidence, a selection of which is detailed as follows:
North Brisbane Rent $/m²
Lease Term NLA Incentive
Property / Tenancy Grade Metro Office Lessee (Gross Reviews Comparison
Date (years) (m²) (Gross)
Precinct Face)
900 Ann Street, Aurizon Operations Circa 12+5+5 Fixed
A Urban Renewal 18,991 $625/m² Confidential Superior
Fortitude Valley Limited Apr- 18 years 3.25%
Montpelier Road, St Vincent’s Fixed
A Urban Renewal Dec-16 5 years 902 $520/m² Circa 32% Comparable
Albion Healthcare 3.50%
77 Hudson Road, Fixed
B Urban Renewal Vita Group Nov-16 7 years 2,998 $490/m² Circa 40% Inferior
Albion 3.50%
100 Wickham Street, Fixed
B Urban Renewal State of QLD Sept-16 7 years 4,980 $520/m² Circa 36% Inferior
Fortitude Valley 3.75%
515 St Pauls Terrace, Fixed
A Urban Renewal Careers Australia Mar-16 2 years 1,969 $560/m² Undisclosed Comparable
Fortitude Valley 3.00%
100 Wickham Street, Fixed
B Urban Renewal BJB Global Pty Ltd Aug-15 3 years 996 $512/m² Circa 35% Inferior
Fortitude Valley 3.50%
HQ North, 520
Cunningham Fixed
Wickham Street, A Urban Renewal Jul-15 6 years 1,118 $575/m² Circa 32% Comparable
Lindsey 3.75%
Fortitude Valley
5 Lobelia Circle, Royal Flying Fixed
B Brisbane Airport Dec-16 5 years 901 $425/m² Circa 35% Inferior
Brisbane Airport Doctor Service 3.50%
10 The Boulevard, Fixed
B Brisbane Airport Hanson Sep-16 12 years 3,054 $400/m² Circa 31% Inferior
Brisbane Airport 3.50%
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 25Rent
North Brisbane
Lease Term NLA $/m² Incentive
Property / Tenancy Grade Metro Office Lessee Reviews Comparison
Date (years) (m²) (Gross (Gross)
Precinct
Face)
42-44 Qantas Drive, Dept. Agriculture & Fixed Capital works to
B Brisbane Airport Feb-16 5 years 4,115 $400/m² Inferior
Brisbane Airport Water Resources 3.50% building
Da Vinci Business Fixed
B Brisbane Airport Officeworks Jan-16 5 years 309 $320/m² $110,000 Inferior
Park, Brisbane Airport 3.5%
3 months
371 Macarthur Fixed
B Hamilton Commscope Oct-16 3 years 185 $415/m² rent free + Inferior
Avenue, Hamilton 3.0%
$60k fitout
405 Macarthur $500,000
Australian Fixed
Avenue, Northshore B Hamilton Jan-16 16 years 1,000 $415/m² capital Inferior
Childcare 4.0%
Hamilton contribution
371 Macarthur Fixed Turnkey
B Hamilton Wabtec May-15 7 years 184 $401/m² Inferior
Avenue, Hamilton 3.5% fit out
371 Macarthur Fixed Turnkey
B Hamilton Fujitsu May-15 7 years 400 $403/m² Inferior
Avenue, Hamilton 4.0% fit out
365 Macarthur Annual
B Hamilton Puma Energy Jun-15 15 years 6,019 $393/m² Nil Inferior
Avenue, Hamilton CPI
371 Macarthur Sandhills Fixed
B Hamilton Jan-15 5 years 828 $398/m² Circa 32% Inferior
Avenue, Hamilton Publishing 3.5%
Hamilton Road, Brisbane City Fixed
A Chermside Jan-17 15 years 6,000 $475/m² Fitout Inferior
Chermside Council 3.50%
831 Gympie Road, Department of Annual
B Chermside Aug-16 6 Years 2,886 $393/m² Circa 35% Inferior
Chermside Health CPI
Payroll Portfolio
831 Gympie Road, Annual
B Chermside Health Support Aug-16 6 years 703 $400/m² Circa 35% Inferior
Chermside CPI
QLD
Department of
831 Gympie Road, Fixed
B Chermside Housing & Public Jun-15 3 years 372 $417/m² Undisclosed Inferior
Chermside 4.00%
Works
Conclusion
In terms of competition analysis, we believe that given the A Grade quality and nature of the accommodation provided
by the subject Property, it is of a superior standard to anything currently available in Nundah, Brisbane Airport,
Hamilton and Chermside.
It is most comparable to the larger format, A Grade premises available in Fortitude Valley/Newstead (Urban Renewal
precinct), where gross face rentals of $520 - $600/m2 are achievable.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 265.5 Indicative Leasing Strategy (Hypothetical Scenario)
It is noted that the Property is fully tenanted and has a weighted lease duration (area) of 9.4 years (as at 1 July 2017).
Centuria has requested that Colliers provide a hypothetical leasing strategy in order to understand the types of
tenants who might have an interest in an office building of this grade and in this location.
Given the remaining terms on the major head leases are well beyond forecasting periods, we are not able to foresee
the types of tenants or the competitive profile as at the time that the building may become vacant and as such, our
analysis is based on tenants, space requirements and competitor offerings in the current market.
Site and Building
The Property is of an A-grade metropolitan office standard and has a 4.5 Star NABERS Energy and 4.5 Star NABERS
Water rating.
The building is close to passenger rail services at Nundah station and has a vibrant amenity offering in and around
the Nundah centre for food and dining and other services. The location is proximate to the Brisbane Airport, Airport
Link Tunnel and Gateway Motorway. The building is within 15mins of the Brisbane CBD.
The building provides a high car parking ratio.
Target Tenants
The building design and configuration is supportive of tenancies with larger space requirements who do not require
a CBD presence and/or those tenants who require a north Brisbane location with proximity to major road, rail, airport
and port infrastructure.
Colliers International considers that the Property would be suitable to the following tenant types:
State or Federal Government- e.g ATO, Department of Education etc.
Semi Government Tenants – e.g Energex, Ergon
Large engineering and civil contractors – e.g Aecom, Golding, Clough
Mining/ Energy Companies
Travel or Airport Related Companies – e.g Virgin Australia, Flight Centre, Boeing
Banking, Superannuation and Insurance groups – e.g Bank of Queensland, Sunsuper, Allianz
Education and Training Providers
IT and Telecommunication companies
Note: The examples provided are for information purposes only and are based on Collier’s market knowledge and/or are existing tenants in other
locations who have significant office space requirements outside of the Brisbane CBD.
In the event that a whole of building occupier could not be procured, then the suggested tenancy targets would be
for:
Larger anchor tenants for the Energex space (8,700sqm) which includes the central atrium/stairwell area.
Various private commercial tenants with a preference for larger full floor and flexible tenancies (circa 1000
sqm).
Potential for shared office (co-working style tenants) who may have larger space requirements.
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 27Colliers International Brisbane
Level 30, ONE ONE ONE
111 Eagle Street
Brisbane QLD 4000
+61 7 3229 1233
www.colliers.com.au
Colliers International Centuria Property Funds Limited 1231 Sandgate Road, Nundah QLD 28You can also read
