The Deal Magazine | October 2021 - Commercial by Ray White AKG

C ommercial

BY RAY WHITE AKG

THE DEAL MAGAZINE

OCTOBER 2021

CONTENTS 3

DEMAND FROM INVESTORS DRIVING UP INDUSTRIAL PROPERTY PRICES WITH ANGUS PAGE

5

WHAT IS INSTORE FOR THE COMMERCIAL OFFICE MARKET - POST COVID WITH JAMIE DAVEY

7

LEASING NOW (FEATURED PROPERTIES)

9

SELLING NOW (FEATURED PROPERTIES)

11

JUST LEASED (FEATURED PROPERTIES)

14

JUST SOLD (FEATURED PROPERTY)

15

HOW HAS COVID-19 IMPACTED COMMERCIAL PROPERTY WITH RAY WHITE ECONOMICS TEAM

17

COMMERCIAL ASSET MANAGEMENT WITH RACHAEL CURTIS

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KNOW THE TEAM

Demand From Investors Driving Up Industrial Property Prices with Angus Page

The industrial property market is going from strength to strength as capital values continue to rise across South East Queensland. Record low interest rates combined with the security associated with investing in tangible assets have resulted in an influx of investors looking to acquire industrial property. Most of these investors are chasing a passive annual income stream that represents a good return on their investment. This increased demand has created fierce competition between investors, compressing yields to record low levels and driving up the value of industrial assets.

The limited supply of investment opportunities has led to people seeking alternative options to achieve their investment objectives. These may involve more risk but also have the potential for a higher return. This includes purchasing vacant properties with the intention of securing a tenant as soon as possible, and purchasing land that can be developed. Industrial zoned land is now in short supply with some of Queensland’s largest upcoming industrial land subdivisions, including the Crestmead Logistics Estate and the Yatala Logistics Hub, being completely pre-committed months prior to receiving titles.

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How long will this growth continue?

Is now the right time to sell?

There are many promising indicators that suggest these market trends may continue including increased levels of interstate migration, the upcoming infrastructure in South East Queensland and the 2032 Olympic Games. However, there is also a large amount of uncertainty surrounding the impact of the COVID-19 Pandemic on the future of the economy and how this may impact the industrial market in South East Queensland. In early 2020, it was highly anticipated that the property market would crash with COVID-19 and lockdowns looming. What actually happened was quite the opposite. Right now, investment demand has driven industrial property values to an all time high. No one knows what the market will look like in 12 months.

Angus Page Associate Director of Commercial

0433 627 769 angus.page@raywhite.com

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What Is Instore For The Commercial Office Market - Post Covid with Jamie Davey

It was over 18 months ago that the first covid case was reported in Australia, yet the impact the pandemic has had on the Australian office market continues to be a prevalent topic of discussion for most landlords. Office occupancy rates are still below pre-covid levels and landlords will need to start diversifying their tenant base to ensure their properties are not vacant for extended periods of time. With many businesses adopting the work-from-home model on either a part time or full-time basis, it is leaving a gap in the office market as these organisations have had to either postpone plans for relocation or sublet tenancies to continue operations.

What does this mean for the Queensland office market moving forward?

Pre-covid times saw the office market dominated by five major industries: Professional Services, Information Technology, Finance and Insurance Services, Mining and the Public Sector, however with the pandemic affecting the way these major businesses operate there is a need for landlords to look beyond these tenants and incorporate nontraditional occupiers such as educational and healthcare services.

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Educational and Healthcare services are generally long-term occupiers, which for most landlords will be a benefit as they hedged the vacancy risk due to their limited need of relocation and will be seen as a more attractive option as the traditional occupiers continue to be challenged by ongoing economic uncertainty.

Although there are certain prerequisites to be met before a property can be occupied by a training or educational facility, the weaker market conditions and competitive leasing environment prove that it would be best to invest in some capital expenditure to ensure a long-term tenant can be secured.

According to a study conducted by Jobs Queensland in early 2020, it was predicted that over the next few years 60% of all new jobs created will be across just four industries; Healthcare, Professional Services, Education and Accommodation and Food Services.

While the issues facing the office market are expected to continue in over the short term, the outlook of employment growth in healthcare and educational services continues to be positive. This growth will provide landlords the opportunity to diversify their tenancy base and also allow healthcare and educational tenants a chance to improve their current operating environments.

Jamie Davey Associate Director of Commercial 0400 763 772 jamie.davey@raywhite.com

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LEASING NOW

Featured Properties This Month OFFICE 5+6/84 Wembley Rd LOGAN CENTRAL $55,000 Gross PA + GST Building: 145sqm

Corporate Ground Floor Office Suite - 145sqm Modern fit-out in place comprising of multiple sound proofed offices Ideally suited to professional office or government services Security system in place with swipe card services Walking distance to Logan Central bus services and Woodridge train station

JAMIE DAVEY 0400 763 772

INDUSTRIAL 3/76 Mica Street CAROLE PARK $34,000 per annum + GST (outs included) Building: 341sqm

Affordable and Conveniently Located 341sqm* of total floor area 236sqm* of metal clad warehouse 105sqm* of mezzanine storage Large rear yard 3-phase power

ANGUS PAGE 0433 627 769 7

LEASING NOW

Featured Properties This Month OFFICE 25 Barklya Place MARSDEN $55,000 Net PA + Outs Building: 205sqm Land: 304sqm

Well Presented Ground Floor Office With Ample Onsite Parking - 205sqm JAMIE DAVEY Professional fit-out in place comprising of open plan, partitioned offices and meeting/boardrooms Generous entry reception area with great natural lighting

0400 763 772

INDUSTRIAL 1-9 Kellar Street BERRINBA $$341,875 per annum Building: 2,735sqm

Brand New Freestanding Facility with Great Vehicular Access Concrete tilt panel construction 2735m2 of premium office/warehouse 2464m2 of quality clearspan warehouse 271m2 of A-grade office space Warehouse access via 3 large electric roller doors and a single loading dock

ANGUS PAGE 0433 627 769 8

SELLING NOW

Featured Properties This Month OFFICE 13/3986 Pacific Highway LOGANHOLME $1,800,000 (Going Concern) Building: 445sqm

Investment Opportunity on the Pacific Hwy Returning 6.42% TEntire top floor, offering a total floor area of 445sqm* High profile location with great signage exposure to the Pacific Highway Brand new 3 year lease, beginning 1st August 2021, with a 3 year option Returning $115,700 Net PA + Outgoings + GST with 3% annual increases

JAMIE DAVEY 0400 763 772

INDUSTRIAL 22/22 Mavis Court ORMEAU

$550,000 + GST Building: 204sqm

Corporate Facility with First Class Office Fitout Concrete tilt panel construction 204sqm* of premium office/warehouse 93sqm* of quality clearspan warehouse 111sqm* of prime grade office over two levels Warehouse access via a container height roller door

ANGUS PAGE 0433 627 769 9

SELLING NOW

Featured Properties This Month SHOWROOM 11/157 North Road WOODRIDGE $390,000 + GST Building: 205sqm

Retail Showroom/Office Just Off Busy Main Road - 205sqm 205sqm* Total floor area with an additional 50sqm* mezzanine floor Ideally suited to an office/ retail shop/ gym or bulky good storage (*stca) Full glass frontage offering great natural lighting Large showroom/ entry reception area - 70sqm*

JAMIE DAVEY 0400 763 772

INDUSTRIAL Lot 32 Warehouse Ct YATALA

$550,000 + GST Building: 204sqm

Premium Industrial Facility - Available Early 2022 Brand new 1688sqm* facility on a 2915sqm* block 1473sqm* of clearspan warehouse 176sqm* of high quality office space 39sqm* of mezzanine storage

ANGUS PAGE 0433 627 769 10

JUST LEASED

Featured Properties This Month INDUSTRIAL 1/8-12 Monte Khoury Drive

LOGANHOLME Building/Land: 855sqm

LEASED BY JAMIE DAVEY! After being on the market with multiple agencies for over 24 months, the team at Ray White AKG were able to secure a suitable long term tenant who will be utilising the property to its full potential whilst they design and manufacture revolutionary, sustainable, technology solutions for the electricity grid.

During the campaign we received over 30 inquiries and conducted 15 site inspections.

The final result for the owners was a 3 year term with a 3 year option.

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

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JUST LEASED

Featured Properties This Month INDUSTRIAL 16A/38 Eastern Service Road STAPYLTON Building: 294sqm

LEASED BY ANGUS PAGE! Multiple businesses were interested in leasing this property and it only took a week to secure a tenant at asking price. Upgrade Studio had just missed out on another property around the corner and were eager to move quickly to secure this one.

Upgrade Studio is a brand new company that specialise in car upgrades and wraps. The landlord of 16A/38 Eastern Service Road, Stapylton is affiliated with the nationally recognised company RJ Batteries. The leasing process was easy for both parties and has allowed for a good relationship to foster between Upgrade Studio and RJ Batteries. In fact, Upgrade Studio is now wrapping cars for RJ Batteries at a very competitive rate. A good relationship between a landlord and tenant can lead to beneficial outcomes for everyone involved.

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

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JUST LEASED

Featured Properties This Month OFFICE 7/84-86 Wembley Rd LOGAN CENTRAL Building: 74sqm Land: 1,817sqm

LEASED BY JAMIE DAVEY! After a 3 month campaign, fielding multiple inquiries and conducting many inspections, Ray White AKG successfully leased out this premises to a neighbouring business.

The tenant, who only recently leased an office in the building next door, required more space as their educational and training facility proved to be more popular than anticipated.

This resulted in a 3 year lease term at the asking price with an option for the tenant to have first option to lease additional space after 6 months of operation.

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

13

JUST SOLD

Featured Property This Month OFFICE 1/38 Eastern Service Road STAPYLTON $1,150,000 (Going Concern)

Building: 591sqm

SOLD BY ANGUS PAGE! 4The marketing campaign for this property was extensive and strategically targeted. It ended up generating more than 90 enquiries which ultimately resulted in several offers. This allowed the sellers to achieve a sale price that they were very happy with.

The purchasers of this property have run a business from their shed at their home for the past few years. What started out as a hobby has quickly turned into something much more. The shed at their home has continued to expand over the years and now they have decided it is time to move the business to a much larger seperate premise.

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

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HOW HAS COVID - 19 IMPACTED

COMMERCIAL PROPERTY? with Ray White Economics Team

The COVID-19 pandemic has significantly impacted our economy with various lockdowns and restrictions altering the way we interact with property, notably commercial assets. While interest rates remain low and financing options are greater than ever before given the weight of funds in the market, we’ve seen some significant results across the commercial investment market.

However, some asset classes have fared better than others; here is our guide to how COVID-19 has impacted commercial property:

Industrial property in much higher demand The Industrial asset class has been the big winner during COVID-19, the increase in online shopping has grown the need for logistic/transport and warehousing assets, this is a combination of larger distribution facilities as well as smaller last mile locations throughout metropolitan areas.

Well located assets continue to thrive with vacancy levels falling and rents showing some improvement, currently Industrial is the asset class most in favor with investors contesting for occupied assets resulting in tightening of investment yields.

For some markets such as the Gold Coast and Sunshine Coast which have seen a large population increase due to interstate migration, this sea change has also brought an increase in new business starts. We’ve seen many of these small businesses borne out of COVID-19 job losses flourish and have also stimulated the smaller end of the industrial market, growing occupancy in the industrial unit market.

Impact of retail is dependent on centre type As much of the country has come in and out of lockdowns since the pandemic commenced, this has made trade difficult for the retail sector. We’ve seen several businesses unable to weather the COVID storm and shut up shop leaving large vacancies across retail strips and shopping centres impacting rents. While supermarket and fresh food retailers have enjoyed an increase in custom other food retailers have had to grapple with take away and deliver options to keep the doors open, the ability to online shop across many sectors such as clothing and soft goods has further pressured businesses to close.

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Large format retailers have had some surge in activity over this time, a combination of work from home growing electronic sales and rising residential prices seeking furniture, whitegoods, gardening and home improvement still going strong. For some landlords, repositioning assets during this time of high vacancy has been fruitful with industries such as medical and childcare continuing to be active over this time and we have seen some retail assets successfully redevelop, future proofing these assets.

Impact on the office market still to be determined Working from home has been forced upon many businesses in 2020 as the states moved in and out of lockdown through to today. The high overhead of office accommodation has led to some businesses looking to rationalise their space requirements which has seen sublease vacancies increase over the past year. Across all office markets we’ve seen vacancies increase which results in pressure on rents down or a growth in incentives on offer.

Major office markets like Sydney and Melbourne CBD’s are some of the worst affected, however are expected to rebound given the trophy nature of the city and their assets, while smaller suburban markets may take longer to recover. The onset of the pandemic has changed the way in which many workplaces interact with their office accommodation, which may result in a need for larger/smaller footprints, more flexible spaces, suburban satellite offices or even eliminate a full time location with serviced or shared offerings again growing in popularity. More time is needed to understand the true impacts for the office market however it’s encouraging to see take up of stock in overseas locations grow as lockdowns end and vaccination levels increase.

Increasing demand for alternative property Alternative assets have been growing in popularity over the last 10 years as investors continue to seek out higher yielding investment options, these may include childcare, service stations, data centres, medical and fast food. Over time, this high demand has resulted in substantial decreases in yields, their often long-term, secure lease covenant has only fueled activity notably during this time of low interest rates and high availability of finance.

During COVID-19 these assets have not been substantially impacted, childcare continues to operate even during lockdowns, medical establishments have only increased their need, more of the population is frequenting take away food options and as we spend more time at home our data requirements only increase. Limited travel has seen fuel sales down, however the growth in the new and used car market highlights a longer-term confidence for these assets. Concern regarding electric vehicles has not deterred competitive investment as the Australian Government have not shown any leadership around this, unlike many other parts of the world which have mandated targets to reach regarding electric vehicle sales. However we see many savvy operators and developers of new assets grow their food and other offerings to cater for the future charge market.

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Commercial Asset Management with Rachael Curtis 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 maximize financial returns in the commercial property management sector. That's why there is no team better equipped to achieve this than the Commercial Team at Ray White AKG. Award - winning property managers who oversee 700 rental properties, Commercial by Ray White AKG brings phenomenal energy, enhanced marketing techniques and a reputation for results with a 4.9 Google rating as a proof of our premium customer service advocacy.

Our property management team has 8 amazing property managers, possesses dynamic teamwork and unmatched experience and enthusiasm. Our key point of difference is our hands-on personalized 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 the confidence that their property and tenants are in good care.

It's a privilege to partner with clients to increase profits and ensure these valuable assets are well looked after. We would like to help you maximise returns and minimise stress. To know more about Commercial by Ray White AKG Property Management and our determination to be 'positively different', contact our team today!

"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! In particular Rachael and the Property Management team - thank you for your advice and assistance in every way, I am absolutely delighted with your service." - Liam Fuggle

Rachael Curtis Director of Commercial Property Management 0490 471 535 rachael.curtis@raywhite.com

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KNOW THE TEAM

AVI KHAN Director 0400 666 809

ANGUS PAGE

Associate Director of Commercial

0433 627 769

RACHAEL CURTIS

Director of Commercial Asset Management

0490 471 535

JAMIE DAVEY Associate Director of Commercial 0400 763 772

GENEVIEVE TREW

Group General Manager

07 3805 3108

Prepared by:

COMMERCIAL BY RAY WHITE AKG 18

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0406 886 611 contact@sellbuylegal.com.au

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