The Deal Magazine | March & April 2022 Edition With Ray White AKG

ommercial C

BY RAY WHITE AKG

APRIL 2022

THE DEAL MAGAZINE

CONTENTS 3

BENEFITS OF ENGAGING A COMMERCIAL PROPERTY MANAGER FOR YOUR INVESTMENT PORTFOLIO

5

LEASING NOW (FEATURED PROPERTIES)

7

SELLING NOW (FEATURED PROPERTIES)

9

JUST LEASED (FEATURED PROPERTIES)

11

JUST SOLD (FEATURED PROPERTY)

12

THE GROWTH IN AUSTRALIAN COASTAL OFFICE MARKETS

14

WHAT DOES A $2 MILLION COMMERCIAL INVESTMENT LOOK LIKE?

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KNOW THE TEAM

Benefits of Engaging a Commercial Property Manager For Your Investment Portfolio

by Angus Page & Jamie Davey

Introduction At face value, the role of a commercial property manager is to make sure the rent is paid, deal with disputes and advise on strategy. However, there are a number of additional benefits that make engaging a commercial property manager an extremely wise decision that will save a landlord time and money in the long term.

Expert Advice & Service One of the key and most overlooked benefits of a commercial property manager is that you are engaging a professional that maintains a current working knowledge of quite a complex industry.

There is no distinction between a property manager and a private owner in regards to the legislative requirements when dealing with tenants. This means that a landlord that self manages their property must keep up with constantly changing legislative requirements or they might find themselves facing legal ramifications. A commercial property manager spends their working lives in the industry and as such are aware of these amendments in legislation. Furthermore, property managers are aware of the current market trends and are therefore able to ensure an asset is performing optimally. Commercial property managers have a vast amount of experience handling complex situations and are able to provide expert advice to avoid conflict and negative outcome.

Better Tenant/Owner Relationship Communication and relationship breakdowns is one of the most common complaints that we hear from tenants that are coming from self managed properties. Often this is the primary reason they are leaving their current tenancy and most of the time the landlords are not aware of this. A commercial property manager serves as a buffer between the landlord and tenant. They provide a clear easy path of communication between both parties to facilitate and maintain a healthy and professional relationship. They act as intermediaries to settle conflict situations, ensure rent is paid on time, and property maintenance is carried out.

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Great commercial property managers develop good relationships with their tenants and know how to keep them happy. Tenants that are happy and feel like there is a clear channel of communication are more likely to want to stay long term and renew their leases.

Connections Property managers provide various tradespeople with repeat business. Even when engaging a new tradesperson, the possibility of additional clients gives property managers far greater negotiating power. This ensures landlords get the best possible price on maintenance jobs. Think of it like bulk buying.

It's FREE - So Why Not? The majority of commercial lease and tenancy agreements in Queensland are Net rental agreements. This means the tenant is responsible for paying the outgoings associated with the property in addition to the rent. Outgoings change depending on the property but typically include council rates, water rates, body corporate fees, land tax, and management fees. Therefore, the landlord bears no cost in having their property be managed by an industry professional.

Conclusion The notion of “I have the time and patience to manage the property myself and it will save me money in management fees” is the driving force behind the decision for landlords to self manage their properties. On the surface, this is an understandable decision but when you look into the less known benefits of engaging a commercial property manager, it becomes a case of

"Knowing enough to think you are right, but not enough to know that you are wrong.”

- Neil deGrasse Tyson.

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LEASING NOW

FEATURED PROPERTIES THIS MONTH OFFICE 3964 Pacific Highway LOGANHOLME From $24,500 Net + GST

Building: 98 - 300sqm

Recently Refurbished Office Space With Great Exposure 3 office suites offering a total floor area of 300sqm* over 2 levels.

Available units include suite 2: 102sqm*, Suite 3: 100sqm* & Suite 5: 98sqm* Generous entry reception areas Open plan areas leading out to private balconies Partition offices and board/ meeting rooms Ducted air-conditioning throughout

JAMIE DAVEY 0400 763 772

INDUSTRIAL 2 Arthur Dixon Court YATALA

Contact Agent Building: 17,958sqm Land: 3.9669ha

First Class Industrial Headquarters Multiple sizes avaiable: 7,508sqm* - 17,958sqm* Large all weather awning 10 x container height roller doors 2 x loading docks Rainwater tanks & solar panels

ANGUS PAGE 0433 627 769 5

LEASING NOW

FEATURED PROPERTIES THIS MONTH OFFICE 27 Barklya Place MARSDEN $45,000 Net PA + GST

Building: 210sqm Land: 304sqm

Ground Floor Office / Retail Property With Ample Onsite Parking Total floor area of 210sqm* Currently divided into 2 separate tenancies of 105sqm* each Full glass frontage with security grills Ample onsite parking for staff and visitors Private amenities and kitchenette facilities in each tenancy Front and rear building signage opportunities

JAMIE DAVEY 0400 763 772

OFFICE 3/93 Chambers Flat Road MARSDEN

$22,200 Per Annum + Outgoings + GST Building: 86sqm

Affordable Office/Shop with Great Exposure!

86sqm* blank canvas site Massive main road exposure & excellent signage opportunities Rear door access Kitchenette Amenities in complex

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ANGUS PAGE 0433 627 769

SELLING NOW

FEATURED PROPERTIES THIS MONTH OFFICES 27 Barklya Place MARSDEN

$500,000 + GST

Building: 210sqm Land: 304sqm

Ground Floor Office / Retail Property With Ample Onsite Parking Total floor area of 210sqm* Currently divided into 2 separate tenancies of 105sqm* each Full glass frontage with security grills Ample onsite parking for staff and visitors Private amenities and kitchenette facilities in each tenancy Front and rear building signage opportunities

JAMIE DAVEY 0400 763 772

INDUSTRIAL 56 Griffin Crescent BRENDALE

CONTACT AGENT Building: 2,265sqm Land: 4,254sqm

Premium New Corporate Facility New 2265sqm* facility on a 4254sqm* block 1931sqm* of clearspan warehouse 335sqm* of A-grade office space over two levels 8m minimum internal warehouse clearance 3 x 5m wide container height electric roller doors 2 x 8m wide container height electric roller doors

ANGUS PAGE 0433 627 769 7

SELLING NOW

FEATURED PROPERTIES THIS MONTH OFFICE 21/56 Sanders Street

UPPER MOUNT GRAVATT

$590,000 + GST (if applicable)

Building/Land: 107sqm

107m²* Professional Office Suite Walking Distance To Westfield Garden City Total floor area of 107sqm* including an 8sqm* private balcony Professionally presented with modern fit-out Ample natural lighting Generous entry reception area, partitioned board/meeting room and open plan area Ducted air conditioning throughout Large kitchen/staff room

JAMIE DAVEY 0400 763 772

INDUSTRIAL Lot 32 Warehouse Circuit YATALA

CONTACT AGENT Building: 1,809sqm Land: 2,915sqm

Premium Industrial Facility - Available Early 2022 Brand new 1809sqm* facility on a 2915sqm* block 1461sqm* of clearspan warehouse 307sqm* of high quality office space over two levels 41sqm* of mezzanine storage Minimum internal warehouse clearance of 8m

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ANGUS PAGE 0433 627 769

JUST LEASED LEASED BY ANGUS PAGE RETAIL 13/40 Browns Plains Road

BROWNS PLAINS $45,000 + GST Building: 145sqm

This property had been on the market for several months with multiple agents before we were able to successfully secure a new tenant. The new tenant is located in the same complex and is excited to expand their business operations.

ANGUS PAGE Associate Director of Commercial 0433 627 769 angus.page@raywhite.com

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JUST LEASED LEASED BY JAMIE DAVEY INDUSTRIAL 19-21 Ironstone Road BERRINBA $196,239 Net PA + GST Building: 1,784sqm Land: 2,891sqm

This property was listed online with other agencies, however we were able to lease the property without listing it online by sending it out to our database of ready to go clients. The tenant was looking for a site to lease for a few months, but couldn't find anything suitable. Once they saw this property become available they didn't waste any time in securing it for themselves.

JAMIE DAVEY Associate Director of Commercial 0400 763 772 jamie.davey@raywhite.com

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JUST SOLD

LEASED BY ANGUS PAGE RETAIL 13/40 Browns Plains Road

BROWNS PLAINS

$820,000 (Going Concern) Building: 145sqm

After successfully leasing this property, it was quickly sold as a going concern for a phenomenal price. The vendor is ecstatic to have achieved such a fantastic result.

ANGUS PAGE Associate Director of Commercial 0433 627 769 angus.page@raywhite.com

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THE GROWTH IN AUSTRALIAN COASTAL OFFICE MARKETS with Ray White Economics Team There has been significant turbulence across the global office markets over the past couple of years, as staff were encouraged to work from home due to the threat of COVID-19 and subsequent extended lockdowns. As employers grapple with the forced change in working conditions, many staff have embraced this new era, resulting in some reluctance to move back into major CBDs on a full time basis, even as lockdown restrictions ease.

To counter this change we have seen many different working models emerge, including: the combination of working from home/working from office; working close to home (as employers provide satellite office locations); or more local shared office options so collaboration isn’t affected. These changes have seen less staff in the office at any one time, with hot desking rampant. This has resulted in a growth in subleased office space in many CBD locations, and many suburban markets have reaped the benefits.

More noticeable, however, has been the shift in office requirements following population change. Over the last two years, we have seen a significant increase in interstate migration out of “traditional office” user states such as New South Wales and Victoria into Queensland and to some extent Western Australia and Tasmania. A combination of lifestyle and affordability has seen the population relocate, spurred on by the greater ability for the workforce to work remotely. This is most apparent in markets such as the Sunshine Coast and Gold Coast which have witnessed strong interest by both Brisbanebased and interstate businesses looking to provide local office facilities for their broadening workforce. This has resulted in net uptake of office space during 2021 at 17,068sqm and 17,216sqm respectively causing office vacancies to tumble, while CBD vacancies continue to increase.

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These markets offer a mix of weather, lifestyle, affordability which have not gone unnoticed by the Australian population with the continued investment into infrastructure in this region growing its attractiveness. While these markets traditionally have been plagued by older style stock, new developments have attracted a growing pool of potential occupiers resulting in A grade vacancies falling, and demand to invest growing.

Over this same period, we have also seen new business starts in Queensland grow ahead of any other state, suggesting new ventures borne out of COVID-19 employment changes have occurred. We’re seeing these small businesses now outgrow their home start-up and as a result we’ve seen an increase in enquiry for office stock in the sub-250sqm size range. The uptick in requirement for new commercial spaces benefits the local markets due to the variety of businesses needing space. CBD locations in Sydney and Melbourne are heavily weighted towards finance, legal, and professional users. This puts pressure on occupancy levels when economic uncertainty rises, which impacts employment. However, the new mix in tenant types in these Queensland locations spreads risk if sectors of the employment market shift in the future.

While Queensland has the greatest example of this shift to the coast, we have also seen these movements in New South Wales as population movements to regional centres increase. Wollongong, south of Sydney has also enjoyed growth in demand during 2021 of over 6,000sqm, while Newcastle to the north has also seen improvement in demand of 11,446sqm over the same time period.

While these coastal markets enjoy their new, vibrant workforce it’s unclear if this is a passing fad or a long term shift in employment. While the concept of remote working has been accepted during the pandemic, how workforces engage their staff in the years ahead could result in a greater push to suburban, regional and coastal locations or cement our CBDs as economic business hubs. Regardless, the change in population to these locations will continue to see these markets thrive in the short to medium term.

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WHAT DOES A $2 MILLION COMMERCIAL INVESTMENT LOOK LIKE? With Ray White Economics Team

Over the past 18 months we’ve seen a substantial uptick in private investors and owneroccupiers converge on commercial markets looking to diversify their investment portfolio.

Low interest rates, availability of funds due to emerging new lenders and sky-rocketing residential prices are all prompting savvy investors to pivot towards commercial assets.

While some markets have been impacted by COVID-19, such as office space and retail, this hasn’t dampened demand to buy, with many seeing the pandemic as a small blip in the investment cycle. Assets like industrial property have been hotly contested given its strong performance, while other assets like childcare, fast food, medical, and service stations remain fan favourites.

With this increase in demand for these assets, many investors are quickly being priced out of the market, with new lows in investment yields keeping capital values elevated. However $2 million can still buy you a quality commercial asset across the country. Here are a few examples of where to look at next.

Sydney CBD Strata Office - This asset has had a long history of stagnation, but over the last five years there’s been strong capital value growth which hasn’t wavered during COVID-19.

Despite vacancy levels being elevated across the broader Sydney CBD office market, we’ve seen good demand at the higher end of the market by both offshore and domestic investor groups, funds, and trusts that highlight the long-term strength of these assets.

Across strata, both investors and owner occupiers have been eagerly competing for the limited assets available. Current average capital values stand at a little more than $14,000/sqm, and the average sale price is just over $2.1million. A 150sqm office suite in Australia’s premier office market is affordable within a $2 million price range.

Perth Industrial - Industrial assets have been the standout performer during COVID-19 with significantly increased demand for logistics and warehouse space, while small business growth has also resulted in industrial vacancy levels being low across all states.

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Over the past few years we’ve seen Perth industrial assets grow in popularity with local buyers. However, more recently, the strength in the state’s economy has resulted in interstate buyers converging on the various Perth commercial markets. Perth (and most other states) continues to offer quality industrial assets at a range of prices, from smaller industrial warehouse units in the $500,000 and under price range, up to multimillion dollar distribution facilities. The quality and location of assets vary considerably, however, there’s a lot of opportunity up to $2 million. From smaller, new industrial unit developments on the more affordable end, to modern freehold investments on the higher end, there’s also been a high level of older-style freehold assets transact which shows good affordability mid-range.

Medical/Healthcare Assets - Over the past five years, medical facilities/allied health service assets have grown in popularity across savvy commercial investors who have identified the growing need for space in sectors such as sports and cosmetic medicine. During COVID-19, increased need for pathology saw buyers pounce on this sector of the market, looking to capitalise on high occupancy and growing rents. Our ageing population, as well as health services being used across all age groups has made these properties one to focus on.

This is a trend we’re seeing across Australia and high population growth states such as Queensland, Tasmania and Western Australia may have the greater potential however investment demand has been active across all states and prices do vary. However, in the $2 million price range, smaller medical suites can be purchased with larger facilities also possible in some locations.

South East Queensland Retail - While retail assets have received a bad wrap during COVID19 due to forced closure and strong move to online retailing, we’ve more recently seen people moving back to bricks and mortar stores - reducing online trade statistics. However, our behaviours towards retail had been changing prior to COVID-19. We’ve seen retail adapt and move away from clothing and soft goods, to personal goods, services and food in a lot of local centres.

Over the last year we’ve seen many buyers actively pursuing retail assets despite rising vacancies, with the strong gains in population for South East Queensland being a focus for many investors. Local convenience-based retail continues to do well but prices have risen, making a $2 million investment more difficult. However, our behaviours towards retail had been changing prior to COVID-19.

“Set and Forget” Assets - These are assets offering investors long-term rental returns and are typically assets like service stations, child care, and fast food restaurants, offering the owner a stable income stream. While popularity for these have been high over the past 10 years, causing values to skyrocket and investment yields to plummet, there are still opportunities to be had in this category - however, further up the risk curve. Regional cities across Australia continue to offer value for these types of investments and sales have remained high during late 2020 and 2021. However, opportunities have started to dissipate this year given the likelihood of interest rate rises. These are quality investments if they locationally make sense and the quality of tenant and security of income is high. Also, if investing in these assets, consider an exit strategy - this is more important in a regional city as obsolescence could be a factor

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KNOW THE TEAM AT RAY WHITE AKG COMMERCIAL JAMIE DAVEY Associate Director of Commercial 0400 763 772

ANGUS PAGE

RACHAEL CURTIS

GENEVIEVE TREW

Director of Commercial Asset Management

0490 471 535

Associate Director of Commercial

0433 627 769

AVI KHAN Director 0400 666 809

Group General Manager

07 3805 3108

raywhiteakg.com.au

Sales Results We sell more properties than any other agency on the south side of Brisbane, making us the number one agency that sellers trust to achieve an exceptional result.

Scale

Ray White AKG comprises three separate offices and over 40 sales professionals that work together to ensure our sellers benefit from our network of active buyers.

We are professional advisors and negotiators that guide you through the process of selling your commercial asset.

We work for you and our priority is to achieve the best result for your situation.

We pride ourselves on being honest and providing the highest quality service in the industry.

Engaging Ray White AKG will provide you with an individualised, efficient and cost-effective campaign.

Leasing Results Ray White AKG has secured numerous leases across Brisbane, Logan and the Gold Coast. We have worked with a range of companies from small local businesses to the international conglomerates.

Scale

Our extensive database and connections allow us to reach both local and national companies and secure the most suitable tenants for every type of commercial property.

The commercial team at Ray White AKG are experienced local leasing specialists with extensive industry and market knowledge.

We strive to achieve the most optimal result for our clients and work hard to secure reliable good quality tenants. You can be assured that by choosing Ray White AKG your property will get the attention that it deserves.

PROVIDING THE BEST RESULT raywhiteakg.com.au

YOUR ASSET, OUR PRIORITY “I have had the absolute pleasure of leasing out my property through Ray White AKG. From the first point of contact the staff were extremely professional, helpful and went above and beyond for me. I strongly recommend this agency and it has been such a rewarding experience. Thanks again for all of your hard work and I can’t wait to continue this journey with you!”

- Liam Fuggle

The long term performance of an investment property is as reliant on the property management as it is on the upfront purchase price. We understand that investment properties require careful management in order to deliver reliable rental income and continued asset growth. It takes a unique industry insight and in-depth product knowledge to maximise financial returns in the commercial property management sector. That is why there is no team better equipped to achieve this than the Commercial Team and Ray White AKG. We are Award - winning property managers who oversee more than 700 rental properties. We bring phenomenal energy and a reputation for results with a 4.9 Google rating as proof of our premium customer advocacy.

Our key key point of difference is our hands-on personalised approach with our clients and tenants. This leads to more communication and advice, rather than simply providing a report at the end of each month. For our landlords, this provides them with confidence that their property and tenants are in good care.

To Know more about Commercial by Ray White AKG Property Management and our determination to be ‘positively different’, contact our team today!

For All of Your Commercial Needs

SELL & BUY LEGAL

0406 886 611 contact@sellbuylegal.com.au

sellbuylegal.com.au