1. Healthcare

Key Australian
Office Transactions
Savills Research
February 2015
contents
03 Overview
04 Australian Office Property
05 Office Investment Market
06 Adelaide
08 A
delaide Key Office
Transactions 2014
10 Brisbane
12 B
risbane Key Office
Transactions 2014
14 Melbourne
savills research team
Our highly regarded research division is
dedicated to understanding and giving
in-depth insight into the office, industrial,
retail, hotels and residential markets
throughout Australia.
22 P
erth Key Office
Transactions 2014
Savills provides free research reports
on all major property markets, and
some example papers include:
We also provide in-depth consultancy
services, ranging from tenant
representation to property site selection
for multinational businesses.
 Office Markets
 Retail Markets
 Residential Trends
 Industrial Markets
 International Markets
Our research teams are highly
qualified real estate professionals
with comprehensive knowledge of
property markets across Australia.
The Savills Research & Consultancy
team has years of experience, and is
supported by our extensive agency,
16 M
elbourne Key Office
Transactions 2014
21 Perth
property management and valuation
professionals, who are highly regarded
and respected along with Savills
Research teams across the globe.
Savills Research
Western Australia
Spotlight
Perth Industrial
October 2014
Highlights
 A total of 143,877 square metres
of industrial space was reported
leased in the 12 months to
September 2014
 Prime rents in Perth’s industrial
core precinct range from $95 to
$125 per square metre
 Approximately $435 million of
industrial property was reported
sold over the year
 Core land values range from $400
to $1,150 per square metre for
assets up to 5,000 square metres
 A large amount of forecast new
supply will likely lead to softening
conditions in industrial capital and
leasing markets over the next 12
to 18 months
Prime rents in
Perth’s core
precinct range
from $95 to
$125 per
square metre
Savills Research
For our latest reports, contact one of
the team or visit savills.com.au/research
Savills Research
New South Wales
Spotlight
Sydney CBD Office
October 2014
Highlights
 The latest numbers from PCA indicate that overall
vacancy has decreased to 8.4%, down from 9% six
months earlier
 Supply remains severely constrained over the shortterm, with less than 50,000 square metres of net
supply due to complete in the second half of 2014
 Full floor availability as at August 2014 is currently
sitting at 13.8%, with nine available options for
tenants >10,000 square metres
Savills Research
South Australia
Spotlight
Adelaide CBD Retail
October 2014
Highlights
 Net absorption of 57,272 square metres was
recorded in the 12 months to June 2014
 Sales activity in the 12 months to September 2014
totalled $3.7 billion, up 42 % on the amount recorded
in the prior 12 month period
 Indicative A Grade yields currently range from 6.25%
to 7.00%, a decrease of 25 basis points at both ends
of the range in the last 12 months
 Retail vacancy rates have risen in
Rundle Mall to 3.5 percent, together
with an increase to 5.7 percent in
Rundle Street as at September 2014
 Retail turnover in South Australia has
risen by 3.0 percent (seasonally
adjusted) in the year to July 2014
 The Rundle Mall masterplan is
expected to draw consumers back
into the CBD once complete
 Clothing, footwear & personal
accessory is the dominant tenant
Savills Research
Queensland
Savills Research
Victoria
Spotlight
Melbourne Industrial
October 2014
Spotlight
Brisbane CBD Office
October 2014
Highlights
group in Rundle Mall, with 55 percent
of the tenant mix
 Economic benefits of the mining and
defence industries are being offset by
a lack of population growth and
consumer spending in the State
 Recent reductions to interest rates
are anticipated to further boost retail
spending
Retail turnover
in South
Australia has
risen by 3
percent
Savills Research
 Melbourne’s infrastructure continues
to give it a competitive advantage
 A total of 681,5520 square metres
 A total of $1.45 billion of industrial
property was sold in the year to
September 2014
was reported leased in the year to
September 2014
 Land values range from $100 to $200 a
for 216,858 square metres of
reported leasing
 Investment yields for prime industrial
 Pre-commitment activity accounted
 Industrial rents generally range from
$65 to $95 a square metre for prime
industrial space
square metre for land between 1 and 5
hectares
property in a range of 7.00% to 8.00%
 Signs of a recovery in tenant demand
are underway with significant increase
in recent levels of leasing
Institutions &
Privates help
provide investor
demand not
seen since the
onset of the
GFC
Savills Research
Highlights
 According to the Property Council
 Savills recorded approximately
 Savills recorded 79,185 square
 Leasing demand is significantly
the vacancy rate in the Brisbane
CBD was 14.7% at July 2014
metres of leasing activity for the
12 months to September 2014
 Negative absorption of 44,129
square metres in the 12 months to
June 2014
$1.030 billion of transactions in
the 12 months to September 2014
down on historic averages
 The CBD property market
continues to experience a high
level of interest from investors of
all categories
25 Sydney
26 S
ydney Key Office
Transactions 2014
Download the Savills App
for insights at your fingertips
This information is general information only and is subject to change without notice. No representations or
warranties of any nature whatsoever are given, intended or implied. Savills will not be liable for any omissions
or errors. Savills will not be liable, including for negligence, for any direct, indirect, special, incidental or
consequential losses or damages arising out of our in any way connected with use of any of this information.
This information does not form part of or constitute an offer or contract. You should rely on your own
enquiries about the accuracy of any information or materials. All images are only for illustrative purposes. This
information must not be copied, reproduced or distributed without the prior written consent of Savills.
3
overview
The calendar year 2014 marked a
continuation of strong performance
in investment markets with property
sales turnover at record levels and
strong gains made on local and
global sharemarkets.
Interest rates have stayed low, the
search for yield and security remained
strong however there has been
more capital allocated for higher risk
property including development. The
S&P500 index rose 12 percent to a
record high reflecting cheap capital
and a sense of economic recovery in
the United States. This was further
emphasised by the official end of
quantitative easing. The Australian
ASX AREIT Index rose 21 percent and
the Australian dollar fell 9 percent
against the US dollar. Nationally, over
$24 billion of commercial property
has been transacted and over 3.6
million square metres of industrial and
office space has been reported leased
which gives us confidence that the
markets are operating normally.
Commercial property yields in
particular continue to look attractive.
The Australian economy is being
rebalanced as growth in mining
investment softens. This means
housing and retail should continue
to lift with positive knock-on effects
to industrial and office markets. As
consumer confidence continues to
rise, so should business confidence.
As profit margins are restored,
business decision making should gain
momentum. Some State Governments
will move into election mode and
could be expected to provide some
stimulus to parts of the economy
providing further momentum to
investment markets. China (even at a
lower level of growth) and the United
States are forecast to contribute
positively to Australia’s economic
outlook whilst Europe remains a drag.
4
australian office
property
The office cycle is behaving exactly as we
would expect and there is nothing out of the
ordinary going on. Australia’s CBD office
markets have weathered the twin effects of
the GFC and the mining investment boom
over the past seven years to register over
a million square metres of net absorption.
This has occurred in an environment
where business confidence has been
low (apparently) and consumers have
been in their shells.
The fact that we have added nearly
2 million square metres of space to our
CBD office markets in the same seven
year period says a number of things:
Rents are at a level where
construction can occur, they cannot,
by definition, grow much beyond that
Businesses are in a position to
commit to a new building, confident,
forward looking, managing their
business affairs well. This is an
important point. Financial services,
government and corporations have
used the GFC as an opportunity to
work their accommodation harder
by upgrading, consolidating and
reconfiguring their office space. There
are countless examples around the
country and there is more to come
over the next six years
Banks, developers and funds
are ready and available to ensure
buildings are constructed. Debt and
equity markets and an appetite for
risk are all working in harmony
These are not the signs of a market
collapse or markets in dire straits, quite
the contrary, as the office markets are
behaving as they are supposed to.
Interestingly, Sydney, a market which
bore the brunt of the GFC, has seen
its occupied stock remain unchanged
over the past seven years. The rest of
the country has seen occupied stock
increase by over a million square metres.
As to incentives, they are mostly paid
for by higher face rents. In Sydney,
where the incentive has risen from 20
percent to over 30 percent, face rents
have grown by more than the value of
the incentive, this is also the case in
Melbourne, Perth and Adelaide. The
only exception is Brisbane. On average,
in the Australian CBDs incentives have
doubled, but rents have grown by more
than the value of the incentive.
So where do we go from here?
Savills Research forecasts another
million square metres of construction
over the next five years – reinforcing
the three previous bulleted points.
Savills Research also forecasts a
commensurate increase in the amount
of occupied space. So, does this leave
us in the same place? No. Withdrawals
are expected to be in the order of
700,000 square metres. This is on top
of the 500,000 square metres we have
withdrawn over the past seven years.
This will lead to a tightening in the
vacancy rate in some CBDs, especially
for prime buildings as upgrade
activity accelerates.
What is interesting about the forecasts
produced by Savills Research is the
balance of growth and change in market
fortunes. Sydney and Melbourne in
particular are expected to outperform
Perth and Brisbane. This is in part
because the economic cycle is shifting
the balance of growth in the economy
and in part because the location of
new supply is changing with Perth
and Brisbane upgrading the quality
of their stock.
Savills Research forecasts a fall in
incentives in Melbourne and Sydney
and no change in Brisbane and Perth.
What is important to note in these
forecasts is that the growth in the face
rent is forecast to cover the change
in incentives.
5
office investment
market
Savills has recorded approximately
$13.9 billion worth of office transactions
in the 12 months to December 2014
nationally. This is commensurate with
the $14.3 billion in the previous year,
and up on the five year average of
$9.8 billion. During the same period
265 properties were sold, up from the
previous year of 221, and up on the five
year average of 221.
The 'Fund' purchaser category was
again the most active in the national
office investment market for the 12
months to December 2014, purchasing
33 percent of the stock sold (or $4.6
billion worth of office transactions).
However, the 'Private Investor' category
made the most purchases (81).
Having been sidelined for several
years due to issues surrounding their
balance sheet and their units trading
at a discount to NTA, the Trusts
are back and buying again. Funds
are increasingly active as flows to
superannuation continue unabated.
Foreign investors continue to be
attracted to CBD office buildings in
Melbourne and Sydney.
If the RBA is successful in stimulating
stronger growth in the non-resources
side of the economy, then the office
markets in both Melbourne and Sydney
should be the beneficiaries of stronger
tenant demand. Signs of this were
seen in the last six months of 2014
and Savills Research expects this
trend to continue in 2015.
Australian Office
Office Property Sales by Price Range ($m)
December 2004 to December 2014
$16,000
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13
<$24m
$25m-$49m
$50m-$75m
>$75m
Dec 14
Source: Savills Research
Australian Office
Office Property Buyer Profile (%)
12 Months to December 2014
1%
13%
Undisclosed
Trust
2%
33%
Owner Occupier
Fund
1%
Syndicate
31%
13%
Foreign Investor
Private Investor
6%
Developer
Source: Savills Research
6
adelaide
Savills has recorded
approximately $440
million worth of
office transactions
in the 12 months
to December 2014
in the Adelaide
Metro area.
This is up 10 percent from $399 million
in the previous year, and up on the five
year average of $388 million. During the
same period 44 properties were sold,
up from the previous year of 41, and
down on the five year average of 47.
The 'Fund' purchaser category was the
most active in the investment market
for the year ended December 2014,
purchasing 63 percent of the stock
sold (or $279 million worth of office
transactions). However the Private
Investor category had the
most transactions (12).
Sales activity has increased over the
last 12 months with a number of office
assets changing hands and funds
returning as the dominant buyer group.
Interest from larger buyer groups has
remained in the Adelaide market on
the back of reduced financing costs
and attractive yields. Sales volumes of
assets in the sub $25 million range are
expected to remain as the dominant
sector in the short term, and as such
private investors and owner occupiers
are anticipated to remain the prevailing
buyer group. Owners of secondary
grade buildings will be faced with the
need to refurbish existing stock as
disparities between Adelaide’s older
and newer office stock become
more apparent.
Market yields in the Adelaide CBD as at
December 2014 are estimated to range
between 8.00 percent and 8.50 percent
for A Grade buildings, and between
8.75 percent and 9.75 percent for
secondary grade buildings. The average
yield for A Grade office buildings in
the quarter to December 2014 is 8.25
percent, a 25 basis point firming over
the year.
Capital values in the Adelaide CBD
as at December 2014 are estimated
to range from $3,765 to $5,063 per
square metre for A Grade buildings, and
between $2,154 and $4,000 per square
metre for secondary grade buildings.
Average capital values for A Grade
properties are $4,414 per square metre,
a 19.5 percent increase over the year.
Adelaide Office
Metropolitan Office Sales by Price Range ($m)
(>$1m) December 2004 to December 2014
$700
$600
$500
$400
$300
$200
$100
$0
Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13
$1m-$24m
$25m-$49m
$50m-$75m
>$75m
Dec 14
Source: Savills Research
7
8
adelaide key office
transactions 2014
[2] Santos Building,
60 Flinders Street, Adelaide
[3] P
eople’s Choice Credit Union
Building, 60 Light Square,
Adelaide
Price: $80.00 million
Price: $22.00 million
Date: September 2014
Date: September 2014
Initial Yield: 8.34%
Initial Yield: 11.87%
Market Yield: 8.34%
Market Yield: 9.42%
Rate per sq m of NLA: $5,085
[1]
[1] 2
2 King William Street, Adelaide
Price: $41.80 million
Date: June 2014
Initial Yield: 8.38%
Market Yield: 9.01%
Rate per sq m of NLA: $4,347
Vendor: MWQ Properties
Purchaser: Local Syndicate
Comment: The property comprises
a 14 level B Grade commercial office
building completed circa 1970. The
property was refurbished in 1987 and
underwent a major refurbishment in
2010 including but not limited to new air
conditioning units, passenger lifts and
refurbished common areas.
Rate per sq m of NLA: $3,163
Vendor: SachsenFonds
Vendor: SachsenFonds
Purchaser: APPF Commercial
Purchaser: Primewest
Comment: The property sold as part of
a portfolio including the IAG Building at
80 Flinders Street, the People’s Choice
Credit Union Building at 60 Light Square
and the Flinders Link Car Park at 61-67
Wyatt Street. The combined sale price
of the portfolio was $175.20 million.
Santos recently pre-committed to
lease approximately 7,000 square
metres of office space in an adjoining
development at 45 Pirie Street, with
the lease structured such that the initial
lease term expires simultaneously with
the final option period in 60 Flinders
Street. This indicates an intention by
Santos to exercise both option periods
within the subject property.
Comment: The property was
contracted by Lend Lease as part of
a portfolio sale including the Santos
Building at 60 Flinders Street, the IAG
Building at 80 Flinders Street and the
Flinders Link Car Park at 61-67 Wyatt
Street. The combined sale price of the
portfolio was $175.20 million. Prior to
settlement of the portfolio Lend Lease
negotiated the sale of 60 Light Square
to Primewest.
[4] IAG Building, 80 Flinders Street,
Adelaide
Price: $50.00 million
Date: September 2014
Initial Yield: 8.30%
Market Yield: 8.60%
Rate per sq m of NLA: $4,002
Vendor: SachsenFonds
Purchaser: APPF Commercial
9
[6]
[3]
Comment: The property sold as part of
a portfolio including the Santos Building
at 60 Flinders Street, the People’s
Choice Credit Union Building at 60 Light
Square and the Flinders Link Car Park
at 61-67 Wyatt Street. The combined
sale price of the portfolio was $175.20
million. Approximately 4,290 square
metres of the building is sub-leased,
with Bupa occupying levels 2 and 4,
Fyfe occupying level 3 and Santos
occupying level 5.
[5] F
linders Link Car Park,
61-67 Wyatt Street, Adelaide
Price: $23.20 million
Date: September 2014
Initial Yield: 7.43%
Market Yield: 7.43%
Rate per parking bay: $32,955
Vendor: SachsenFonds
Purchaser: APPF Commercial
Comment: The property sold as part of
a portfolio including the Santos Building
at 60 Flinders Street, the IAG Building
at 80 Flinders Street and the People’s
Choice Credit Union Building at 60
Light Square. The combined sale price
of the portfolio was $175.20 million.
The car park has licences to Santos
for a minimum of 162 spaces (with a
right to another 40 spaces) and IAG for
19 spaces, with both licence expiries
aligned to the respective lease terms
in the adjoining buildings.
[7]
[6] 151 Pirie Street, Adelaide
[7] 100 Pirie Street, Adelaide
Price: $72.00 million
Price: $28.63 million
Date: September 2014
Date: August 2014
Initial Yield: 7.17%
Initial Yield: 6.90%
Market Yield: Market Yield: 9.13%
7.26%
Rate per sq m of NLA: $5,727
Rate per sq m of NLA: $3,174
Vendor: Vendor: Melis Developments (Receivers Appointed)
Real I.S.
Purchaser: Local Private Investor
Comment: The improvements
comprise a modern (circa 2006) A
Grade commercial office building with
a 5.5 Star NABERS Energy Rating
constructed over eight levels with
basement parking. The building offers
modern presentation with a glass
curtain wall facade providing ample
natural light. The building has secure
parking for 51 cars accessed via
Naylor Street.
Purchaser: Local Syndicate
Comment: Improvements comprise
a 10 level B Grade commercial office
building completed in 1989, with various
individual tenancies being refurbished
throughout the building since
completion. The property is leased to a
mix of State and Federal Government
departments, as well as a number of
private tenants.
10
brisbane
Savills has recorded
approximately
$1,375 million worth
of office transactions
in the 12 months
to December 2014
in the Brisbane
Metro area.
This is more than half of the $3,110
million in the previous year, and down
on the five year average of $1,811
million. During the same period 35
properties were sold, commensurate
with the previous year of 34, but down
on the five year average of 41.
The 'Fund' purchaser category was the
most active in the investment market
for the 12 months to December 2014,
purchasing 68 percent of the stock
sold (or $936 million worth of office
transactions). Similarly the 'Fund'
category had the most transactions (12).
Market yields in the Brisbane CBD as at
December 2014 are estimated to range
between 6.75 percent and 8.00 percent
for A Grade buildings, and between
8.50 percent and 9.75 percent for
secondary grade buildings. The average
yield for A Grade office buildings in
the quarter to December 2014 is 7.38
percent, a 13 basis point firming over
the last 12 months.
Capital values in the Brisbane CBD
as at December 2014 are estimated
to range from $5,750 to $8,074 per
square metre for A Grade buildings, and
between $3,744 and $5,118 per square
metre for secondary grade buildings.
Average capital values for A Grade
properties are $6,814 per square metre,
a 1.7 percent increase over the last
12 months.
Brisbane Office
Metropolitan Office Sales by Price Range ($m)
(>$2m) December 2004 to December 2014
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13
$2m-$24m
$25m-$49m
$50m-$75m
>$75m
Dec 14
Source: Savills Research
11
“Another $14 billion
transacted with
strong institutional
and foreign
investor appetite.”
Tony Crabb, Savills Research
12
brisbane key office
transactions 2014
[1] 7
0 Eagle Street, Brisbane
Price: $122.70 million
Date: April 2014
Initial Yield: 6.35%
Market Yield: 6.32%
Rate per sq m of NLA: $10,692
Vendor: APPF Commercial
Purchaser: Pembroke Real Estate
Comment: Central Plaza 3, 70 Eagle
Street comprises 13 levels of office
accommodation, ground level retail and
three basement levels of car parking for
64 vehicles which is accessed via the
adjacent building, Central Plaza 2. The
building was completed in 2009 and
has attained a 5.0 Star NABERS Energy
Rating. The property is located within
the Financial Precinct of the Brisbane
CBD with a prominent frontage to Eagle
Street and forms part of the sought after
‘Golden Triangle’ location. The building
provides a good standard of internal
accommodation with typical floor plates
of approximately 855 square metres and
good natural light to all tenancy areas,
considered consistent with an ‘A Grade’
standard under PCA guidelines.
[1]
13
[2]
[2] 5 0 Ann Street, Brisbane
[3]
[3] 4
43 Queen Street, Brisbane
[4]
[4] 3
00 Adelaide Street, Brisbane
Price: $128.94 million
Price: $49.00 million
Price: $47.50 million
Date: July 2014
Date: July 2014
Date: November 2014
Initial Yield: 7.14%
Initial Yield: 6.63%
Initial Yield:
7.80%
Market Yield: 6.90%
Market Yield: 6.27%
Market Yield: 6.27%
Rate per sq m of NLA: $5,053
Rate per sq m of NLA: $8,791
Rate per sq m of NLA: $3,615
Vendor: Harburg
Vendor: Brice Family
Vendor: Charter Hall
Purchaser: CIMB
Purchaser: CBUS Property
Purchaser: Offshore Company
Comment: 50 Ann Street is a 25 storey
commercial office building constructed
circa 1975, with a significant
refurbishment completed in 2007. In
addition to the 25,382 square metres of
office space, the building features 137
square metres of retail on the ground
floor. Car parking is available for a total
of 119 vehicles, located in a secure
basement level. The building has a 4.5
Star NABERS energy rating and typical
floor plates of 1,000 square metres
considered consistent with a ‘B Grade’
standard under PCA guidelines.
Comment: 443 Queen Street
comprises six storeys of office
accommodation and two levels of
basement car parking for 43 vehicles.
The building was completed circa 1983
and is located at the northern end of
Queen Street, adjacent to Customs
House. The property was recently
refurbished and provides a good
standard of internal accommodation
with an average floor plate size of 929
square metres. The building provides
river views from all levels and appears
consistent with an ‘A Grade’ standard
under PCA guidelines. The property was
purchased in an off-market transaction.
Market yield has been assessed on
the basis of a rental guarantee on the
vacant ground floor (445 square metres)
expiring August 2016 at the rate of $650
per square metre.
Comment: Sale of a 22 storey office
building, once the Commonwealth
Courts Building, completed in 1975.
The building comprises a single level
basement, ground floor, two levels of
above ground parking for 36 vehicles
and 19 upper floors offering a total
13,134 square metres of net lettable
area. Individual floors are typically
651 square metres and the standard
of accommodation is consistent
with a ‘B Grade’ classification
under PCA guidelines.
14
melbourne
Savills has recorded
approximately
$4,036 million worth
of office transactions
in the 12 months
to December 2014
in the Melbourne
Metro area.
This is up 40 percent from $2,890
million in the previous year, and up on
the five year average of $2,476 million.
During the same period 106 properties
were sold, up from the previous year
of 86, and up on the five year average
of 79.
The 'Fund' purchaser category was the
most active in the investment market
for the year ended December 2014,
purchasing 37 percent of the stock
sold (or $1,662 million worth of office
transactions). However the Private
Investor category had the
most transactions (45).
The 'Fund' vendor category was the
most active in the investment market for
the year ended December 2014, selling
54 percent of the stock sold (or $2,405
million worth of office transactions).
However the Private Investor category
had the most transactions (68).
Market yields in the Melbourne CBD
as at December 2014 are estimated
to range between 6.50 percent and
7.25 percent for A Grade buildings, and
between 7.75 percent and 9 percent for
secondary grade buildings. The average
yield for A Grade office buildings in
the quarter to December 2014 is 6.88
percent, a 38 basis point firming over
the year.
Capital values in the Melbourne CBD
as at December 2014 are estimated
to range from $5,700 to $8,300 per
square metre for A Grade buildings, and
between $3,400 and $4,900 per square
metre for secondary grade buildings.
Average capital values for A Grade
properties are $6,900 per square metre,
a 11.3 percent increase over the year.
Melbourne Office
Metropolitan Office Sales by Price Range ($m)
(>$2m) December 2004 to December 2014
$5,000
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13
$2m-$24m
$25m-$49m
$50m-$75m
>$75m
Dec 14
Source: Savills Research
15
16
melbourne key office
transactions 2014
[1] C
BW, 550 Bourke & 181 William
Streets, Melbourne
Price: $608.10 million
Date: September 2014
Initial Yield: 5.91%
Market Yield: 6.50%
Rate per sq m of NLA: $7,470
Vendor: Cbus Property
Purchaser: GPT Group and GPT
Wholesale Office
Fund
[1]
Comment: CBW comprises two office
buildings and a retail plaza. 550 Bourke
Street is a 19 level office building
providing 26,256 square metres of
NLA whilst 181 William Street is a 26
level office building providing 49,833
square metres of NLA. The building
is substantially leased to Insurance
Australia Limited and Deloitte providing
a WALE of 5.22 years.
17
[2]
[3]
[2] NAB, 700 Bourke Street,
Melbourne
[3] 7
50 Collins Street,
Melbourne
[4] O
rigin Energy Building,
321 Exhibition Street, Melbourne
Price: $433.50 million
Price: $249.50 million
Price: $208.00 million
Date: September 2014
Date: April 2014
Date: July 2014
Initial Yield: 5.75%
Initial Yield: 7.52%
Initial Yield: 6.80%
Market Yield: N/A
Market Yield: 7.50%
Market Yield: Rate per sq m of NLA: $6,765
Vendor:
Cbus Property
Purchaser: AMP Capital
Wholesale Office
Fund
Comment: Modern office building
constructed over 14 office levels, two
levels of car parking and extensive end
of trip facilities. The building, excluding
the ground floor retail, is fully leased to
National Australia Bank, who occupies
99.2 percent of the building by NLA
until 30 June 2028 with two further
option terms of five years. The property
provides a significant WALE of
13.63 years.
6.78%
Rate per sq m of NLA: $6,125
Rate per sq m of NLA: $6,887
Vendor: Commonwealth
Property Office Fund
Vendor: Cromwell Diversified Property Trust
Purchaser: GPT Wholesale
Office Fund
Purchaser: Invesco Real
Estate Ltd
Comment: This follows the completion
of the Dexus Property and Canada
Pension Plan Investment Board
takeover of the Commonwealth
Property Office Fund (CPA), as part
of which GPT entered into a binding
memorandum of understanding in
relation to the acquisition of the four
properties, three in Victoria. Under the
deal, properties were bought by the
GPT Wholesale Office Fund. They are:
750 Collins Street; half of 2 Southbank
Boulevard, Melbourne; half of 10
Shelley Street, Sydney; and all of 655
Collins Street, Melbourne. 750 Collins
Street is a campus style office building
located in the Docklands precinct of
the Melbourne CBD. The building is
substantially leased to AMP providing
a WALE of 5.2 years.
Comment: A 21 level building leased
to Origin Energy until 2021 with two
further option periods of five years with
fixed annual increases of 4 percent.
The property underwent a significant
$32 million refurbishment in 2011. The
property provides a WALE of 7.14 years.
18
melbourne key
office transactions
2014 (cont.)
[5] F
reshwater Place,
2 Southbank Boulevard,
Southbank (50%)
Price: $196.70 million
Date: April 2014
Initial Yield: 7.15%
Market Yield: 6.48%
Rate per sq m of NLA: $7,163
Vendor: Commonwealth
Property Office Fund
Purchaser:
GPT Wholesale Office Fund
Comment: This follows the completion
of the Dexus Property and Canada
Pension Plan Investment Board takeover
of the Commonwealth Property Office
Fund (CPA), as part of which GPT
entered into a binding memorandum
of understanding in relation to the
acquisition of the four properties,
three in Victoria. Under the deal,
properties were bought by the GPT
Wholesale Office Fund. They are: 750
Collins Street; half of 2 Southbank
Boulevard, Melbourne; half of 10
Shelley Street, Sydney; and all of 655
Collins Street, Melbourne. 2 Southbank
Boulevard comprises a 38 level office
building constructed in 2005. The
building is substantially leased to
PricewaterhouseCoopers and provides
a WALE of 2.88 years.
[6] Ericsson Building,
818 Bourke Street, Docklands
[8] Media House,
655 Collins Street, Melbourne
Price: $152.50 million
Price: $102.20 million
Date: November 2014
Date: April 2014
Initial Yield: 6.97%
Initial Yield: 6.89%
Market Yield: 6.86%
Market Yield: 6.84%
Rate per sq m of NLA: $6,539
Vendor: GPT Group
Purchaser: Hines Global REIT
Comment: This eight level building
in the Docklands precinct is home to
Ericsson Australia. Built in 2007, the
building provides 174 car bays and
ground floor retail. Sold with one floor
vacant. It has been predominantly
leased to Ericsson Australia, Infosys
Technologies Australia and AMP
Services creating a WALE of 3.73 years.
[7] K TS House,
350 Queen Street, Melbourne
Price: $135.00 million
Date: October 2014
Initial Yield: N/A
Market Yield: N/A
Rate per sq m of NLA: $6,109
Vendor: Kinetics Properties
Purchaser: Private Foreign
Investor
Comment: Built in 1990, the 21 storey
building was sold with significant
vacancy.
Rate per sq m of NLA: $6,149
Vendor: Commonwealth
Property Office Fund
Purchaser: GPT Wholesale Office
Fund
Comment: This follows the completion
of the Dexus Property and Canada
Pension Plan Investment Board takeover
of the Commonwealth Property Office
Fund (CPA), as part of which GPT
entered into a binding memorandum
of understanding in relation to the
acquisition of the four properties, three
in Victoria. Under the deal, properties
were bought by the GPT Wholesale
Office Fund. They are: 750 Collins
Street; half of 2 Southbank Boulevard,
Melbourne; half of 10 Shelley Street,
Sydney; and all of 655 Collins Street,
Melbourne. Completed in 2009, Media
House is a seven level building in the
Docklands precinct directly opposite
Southern Cross station. Leased to
Fairfax for 20 years with two five year
options the building sold with a WALE
of 15.67 years. The building is partly
constructed on a deck above
railway lines.
19
[11]
[9] 2 Riverside Quay, Southbank
(50%)
Price: $106.00 million
Date: November 2014
Initial Yield: N/A
Market Yield: N/A
Rate per sq m of NLA: $10,107
Vendor: Mirvac Group
Purchaser: ISPT
Comment: New office building under
construction. The proposal consists
of a 12 level building containing
20,975 square metres of office space
constructed above the existing car park
at a cost estimated to be $200 million.
[10] 4 84 St Kilda Road, Melbourne
Price: $94.00 million
Date: May 2014
Initial Yield: 7.67%
Market Yield: 7.70%
Rate per sq m of NLA: $4,613
Vendor: Abacus
Purchaser: UBS Grocon
Real Estate
Comment: A 16 storey office building
completed in 1983 providing two levels
of basement parking and ground floor
retail. The property is leased to a variety
of tenants generating a WALE of 3.71
years. Annual reviews range from 3.75
percent to 4 percent on lease terms of
between 3 and 10 years.
[11] 4 59 Little Collins Street,
Melbourne
Price: $45.50 million
Date: September 2014
Initial Yield: 7.45%
Market Yield: 6.92%
Rate per sq m of NLA: $4,576
Vendor: Uniting Church
(NSW) Trust
Purchaser: Enwerd Pty Ltd
Comment: A 16 level office building
completed in 1969 which has
undergone periodic refurbishment,
especially between 2011 and 2013.
Purchaser owns an adjoining building.
Several major tenants occupy the
building with nine of the 15 floors leased
to whole floor tenants. The property
sold with a WALE of 2.34 years.
20
21
perth
Savills has recorded
approximately
$325 million
worth of office
transactions in
the 12 months to
December 2014
in the Perth
Metro area.
This is down 81 percent from $1,702
million in the previous year, and down
on the five year average of $1,045
million. During the same period 16
properties were sold, down from the
previous year of 28, and down on the
five year average of 35.
The 'Foreign Investor' purchaser
category was the most active in the
investment market for the year ended
December 2014, purchasing 66 percent
of the stock sold (or $213 million worth
of office transactions). However the
Undisclosed category had the most
transactions (5).
Perth office stock has traditionally been
purchased by domestic investors,
yet is rapidly growing in esteem with
offshore buyers as demonstrated by
the two major transactions in of 2014.
Offshore capital continues to look
for opportunities in Perth due to its
counter-cyclical nature with the eastern
states allowing a level of diversification;
Perth assets also tend to be higheryielding than those on the eastern
seaboard. As a result of these factors,
both domestic and foreign capital
should continue to seek Perth assets
with solid lease-expiry profiles, however
transactional activity is limited by a
dearth of stock being presented for
sale.
Market yields in the Perth CBD as at
December 2014 are estimated to range
between 7.50 percent and 8.75 percent
for A Grade buildings, and between
8.75 percent and 10.25 percent for
secondary grade buildings. The average
yield for A Grade office buildings in
the quarter to December 2014 is 8.13
percent, no change over the year.
Capital values in the Perth CBD as at
December 2014 are estimated to range
from $6,571 to $10,000 per square
metre for A Grade buildings, and
between $3,854 and $6,000 per square
metre for secondary grade buildings.
Average capital values for A Grade
properties are $8,154 per square metre,
no change over the year.
Perth Office
Metropolitan Office Sales by Price Range ($m)
(>$1m) December 2004 to December 2014
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13
$1m-$24m
$25m-$49m
$50m-$75m
>$75m
Dec 14
Source: Savills Research
22
perth key office
transactions 2014
[1] 130 Stirling Street, Perth
Price: $90.00 million
Date: February 2014
Initial Yield: 8.21%
Market Yield: 8.24%
Rate per sq m of NLA: $7,288
Vendor: Charter Hall
Purchaser: Hiap Hoe Limited
Comment: The property comprises a
modern eight level commercial office
building with floor plates ranging
between approximately 2,700 square
metres and 3,075 square metres and
providing approximately 485 tenantable
car bays, 236 of which are for the
use by the subject property whilst the
remaining bays are for the use of the
adjoining ‘Hatch’ building. The four
uppermost levels comprise office uses,
whilst the remaining floors comprise
predominantly parking bays.
[1]
23
[2] Septimus Roe Square,
256 Adelaide Terrace, Perth
[4] 2
20 St Georges Terrace, Perth
Price: $35.00 million
Price: $80.00 million
Date: November 2014
Date: April 2014
Initial Yield: N/A
Initial Yield: 10.72%
Market Yield:
N/A
Market Yield: 9.22%
Rate per sq m of NLA: $3,806
Gucce Holdings
Rate per sq m of NLA: $5,136
Vendor: Vendor: Aspen Group
Purchaser: Far East Organisation
Purchaser: Kay and Nicola
Giorgetta
Comment: Septimus Roe Square,
originally CAGA Centre, is an 18 level
office building constructed in 1976
with a retail terrace at ground level.
The building comprises a net lettable
area of approximately 17,719 square
metres with typical office floor plates
of approximately 1,046 square metres.
Parking is available for 123 vehicles with
some 83 bays in the basement and a
further 40 open bays. The ground floor
and upper levels are serviced by six lifts
separated into two banks of three.
[3]
[3] R
SM Bird Cameron Building,
8 St Georges Terrace, Perth
Comment: This 10 storey building
was completed in 1984 and provides
parking for 46 cars. It was sold with
over 70 percent of the building available
for lease.
Price: $26.00 million
Date: March 2014
[5] M
arketforce Building,
1314 Hay Street, West Perth
Initial Yield: 10.53%
Price: $9.05 million
Market Yield: N/A
Date: June 2014
Initial Yield: 7.22%
9.22%
Rate per sq m of NLA: $5,709
Vendor: Blackstone Group
Market Yield: Purchaser: GE Real Estate
Rate per sq m of NLA: $4,783
Comment: The building was completed
in 1989. Predominantly occupied by
RSM Bird Cameron with a lease expiring
in 2018. Other tenants in the building
sub-lease. There is parking at the rear
of the property for 17 cars.
Vendor: Millgate Nominees
Pty Ltd
Purchaser: Ascot Capital
Comment: A three level modern office
building consolidated in 1982. The
building provides parking for 40 cars.
An upgrade of some facilities was
undertaken in 2004.
24
25
sydney
Savills has recorded
approximately
$6,665 million worth
of office transactions
in the 12 months
to December 2014
in the Sydney
Metro area.
This is up 21 percent from $5,527
million in the previous year, and up on
the five year average of $3,941 million.
During the same period 107 properties
were sold, up from the previous year
of 90, and up on the five year average
of 72.
The 'Foreign Investor' purchaser
category was the most active in the
investment market for the 12 months to
December 2014, purchasing 44 percent
of the stock sold (or $2,885 million
worth of office transactions). Similarly
the 'Foreign Investor' category had the
most transactions (37).
‘Institutional Investors’ have been ‘net
sellers’ of Sydney CBD office buildings
since 2008, divesting just over $8.7
billion of office assets and purchasing
$5.4 billion. Indeed, in the 12 months
to December 2014 these types of
investors were net sellers of $926
million, purchasing $1,635 million
and divesting $2,561 million.
Market yields in the Sydney CBD as at
December 2014 are estimated to range
between 6.25 percent and 7.00 percent
for A Grade buildings, and between
7.00 percent and 8.50 percent for
secondary grade buildings. The average
yield for A Grade office buildings in
the quarter to December 2014 is 6.63
percent, a 13 basis point firming over
the last 12 months.
Capital values in the Sydney CBD as
at December 2014 are estimated to
range from $8,571 to $13,600 per
square metre for A Grade buildings, and
between $5,294 and $8,357 per square
metre for secondary grade buildings.
Average capital values for A Grade
properties are $10,943 per square
metre, a 1.9 percent increase over
the last 12 months.
Sydney Office
Metropolitan Office Sales by Price Range ($m)
(>$5m) December 2004 to December 2014
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13
$5m-$24m
$25m-$49m
$50m-$75m
>$75m
Dec 14
Source: Savills Research
26
sydney key office
transactions 2014
[1] 5
2 Martin Place, Sydney
Price: $555.00 million
Date: July 2014
Initial Yield: 5.17%
Market Yield: 5.51%
Rate per sq m of NLA: $14,122
Vendor: Queensland
Investment
Corporation
Purchaser: REST Industry Super
Comment: Comprises a refurbished
36 level A Grade office building together
with three levels of retail space, a former
banking chamber atrium and 128 car
spaces. The largest single asset office
transaction in Australia for the last
five years.
[1]
27
[2]
[3]
[2] 275 Kent Street, Sydney (50%)
[3] 1
33 Castlereagh Street, Sydney
(50%)
[4] 5
70 George Street, Sydney
Price: $435.00 million
Price: $194.25 million
Price: $151.80 million
Date: April 2014
Date: February 2014
Date:
March 2014
Initial Yield: 6.67%
Initial Yield: 6.99%
Initial Yield: 5.68%
Market Yield: 6.88%
Market Yield: 7.06%
Market Yield: 5.42%
Rate per sq m of NLA: $11,280
Rate per sq m of NLA: $11,968
Rate per sq m of NLA: $7,887
Vendor: Vendor: Stockland Property
Group
Vendor: Energy Australia
Purchaser: Far East Organisation
Mirvac Group
Purchaser: Blackstone Real
Estate Asia
Comment: Westpac Place comprises a
33 level Premium Grade office (74,593
square metres) building together with
retailing (2,532 square metres including
the child care centre) and 214 basement
car spaces located in the heart of the
Western Corridor.
Purchaser: Investa Property
Group
Comment: Piccadilly Tower, a 31-storey
office tower completed in 1991. There
are two lobbies, the main Castlereagh
entrance and a smaller northern
entrance to floors used by Wesley
Mission.
Comment: Property was sold following
an international expressions of interest
campaign. The property is considered
as a residential development option,
assuming vacant possession achieved
after June 2016.
28
sydney key office
transactions 2014
(cont.)
[6]
[5]
[5] 6 6 Goulburn Street, Sydney
[7]
[6] 6-10 O'Connell Street, Sydney
[7] 10 Shelley Street, Sydney (50%)
Price: $136.00 million
Price: $134.95 million
Price: $130.60 million
Date: June 2014
Date: June 2014
Date: April 2014
Initial Yield: 9.10%
Initial Yield: 6.94%
Initial Yield: 9.52%
Market Yield:
7.47%
Market Yield: 7.49%
Market Yield: 6.37%
Rate per sq m of NLA: $5,868
Rate per sq m of NLA: $8,263
Rate per sq m of NLA: $9,285
Vendor: Australand Property
Trust & Mirvac PFA
Diversified Property
Trust
Vendor: Blackrock Investment
Management
Vendor: Dexus/CPPIB
Purchaser: GDI Property Group
Comment: Comprises a 25 level A
Grade office tower completed in 2004
and located to the southern edge of the
Midtown precinct. The tower comprises
basement level parking (for 54 single
bays), ground floor foyer and retail
space, together with 24 upper levels of
office accommodation.
Purchaser: Investa Property
Group
Comment: The sale represents an
uplift of approximately 27 percent on
the previous sale in October 2012 with
similar occupancy, indicating both
a lift in market rents and a firming of
investment parameters.
Purchaser: Brookfield Asset
Management
Comment: The property formed part of
a four asset portfolio that DEXUS/CPPIB
agreed to sell to GWOF as part of the
CPA transaction. The agreed price for
the 50 percent interest was $130.6
million and subsequently the co-owner
exercised their pre-emptive acquisition
rights. Brookfield Office Properties now
owns 100 percent of the property.
29
[9]
[8] 5 0 & 54-58 Park Street, Sydney
[9] 255 George Street, Sydney (25%)
[10] 59 Goulburn Street, Sydney
Price: $126.80 million
Price: $116.00 million
Price: $90.20 million
Date: February 2014
Date: February 2014
Date: April 2014
Initial Yield: 5.02%
Initial Yield: 6.30%
Initial Yield: 6.98%
Market Yield: 5.20%
Market Yield: 6.62%
Market Yield: 8.32%
Rate per sq m of NLA: $6,011
Rate per sq m of NLA: $11,606
Rate per sq m of NLA: $4,621
Vendor: Kyko Group
Vendor: Purchaser: Far East Organisation
Vendor: Brookfield Asset
Management
Comment: 54–58 Park Street is the
consolidation of three separate buildings
and provides basement, ground floor
loading dock/delivery area, two external
retail tenancies and 12 upper office
floors. Mooted for residential conversion
over the medium-term.
Purchaser: AMP Capital
Comment: NAB House comprises a
30 level A Grade office building
occupying a prominent location in
the Core precinct. The property was
completed in 1985 and underwent
a $42 million refurbishment in
2011 including foyer, NAB office
accommodation and building services.
harter Hall Office
C
Trust
Purchaser: Roxy Pacific
Holdings Ltd
Comment: The property comprises
a 28 level B Grade commercial office
building completed in 1973 and
substantially redeveloped in 2000,
located in the Southern precinct. It
comprises three levels of parking
(124 spaces), lower ground and
ground floor office/retail space.
savills key contacts
Australian Capital Territory
New South Wales
Queensland
Research
Simon Hemphill
+61 (0) 2 8215 8892
[email protected]
Research
Simon Hemphill
+61 (0) 2 8215 8892
[email protected]
Research
Paul Day
+61 (0) 7 3002 8860
[email protected]
Valuations
Phil Harding
+61 (0) 2 6221 8293
[email protected]
Valuations
Lester Alvis
+61 (0) 2 8215 8857
[email protected]
Valuations
Lawrence Devine
+61 (0) 7 3002 8822
[email protected]
Sales & Leasing
Theo Dimarhos
+61 (0) 2 6221 8275
[email protected]
Capital Transactions
Ian Hetherington
+61 (0) 2 8215 8925
[email protected]
Capital Transactions
Anthony Ott
+61 (0) 7 3002 8904
[email protected]
Project Management
Mitchell Thomas
+61 (0) 2 6221 8294
[email protected]
International Investments
Ben Azar
+61 (0) 2 8215 8824
[email protected]
Office Leasing
John McDonald
+61 (0) 7 3002 8847
[email protected]
Office Leasing
Rob Dickins
+61 (0) 2 8215 8833
[email protected]
Asset Management
Chris Ainsworth
+61 (0) 7 3002 8831
[email protected]
Asset Management
Howard Chapman
+61 (0) 2 8215 8870
[email protected]
Project Management
Gary Finnegan
+61 (0) 7 3018 6703
[email protected]
Project Management
David Nicholas
+61 (0) 2 8913 4813
[email protected]
Sunshine Coast
Dustin Welch
+61 (0) 7 5313 7519
[email protected]
Gold Coast
Kevin Carmody
+61 (0) 7 5509 1700
[email protected]
South Australia
Victoria
Western Australia
Research
Tony Crabb
+61 (0) 422 221 604
[email protected]
Research - National
Tony Crabb
+61 (0) 422 221 604
[email protected]
Research
Tony Crabb
+61 (0) 422 221 604
[email protected]
Valuations
Alastair Johnston
+61 (0) 8 8237 5041
[email protected]
Research - VIC
Glenn Lampard
+61 (0) 3 8686 8034
[email protected]
Valuations
Mark Foster-Key
+61 (0) 8 9488 4145
[email protected]
Capital Transactions
Peter Isaksson
+61 (0) 8 8237 5020
[email protected]
Valuations
Francis Lynch
+61 (0) 3 8686 8024
[email protected]
Capital Transactions
Paul Craig
+61 (0) 8 9488 4156
[email protected]
City & Metropolitan Sales
Steve Bobridge
+61 (0) 8 8237 5015
[email protected]
Capital Transactions
Dominic Long
+61 (0) 3 8686 8031
[email protected]
Sales & Investment
Miles Rowe
+61 (0) 8 9488 4116
[email protected]
Office Leasing
Adam Hartley
+61 (0) 8 8237 5043
[email protected]
City & Metropolitan Sales
Clinton Baxter
+61 (0) 3 8686 8021
[email protected]
Office Leasing
Graham Postma
+61 (0) 8 9488 4153
[email protected]
Asset Management
Jeffrey Klaebe
+61 (0) 8 8237 5018
[email protected]
Office Leasing
Mark Rasmussen
+61 (0) 3 8686 8010
[email protected]
Asset Management
Jason Ridge
+61 (0) 8 9488 4118
[email protected]
Project Management
Steve Christodoulou
+61 (0) 8 8237 5004
[email protected]
Asset Management
Sarah Coster
+61 (0) 3 8686 8025
[email protected]
Project Management
Graham Nash
+61 (0) 8 6271 0306
[email protected]
Project Management
Chris Adam
+61 (0) 3 9445 6841
[email protected]
With a rich heritage and a reputation for
excellence that dates back to 1855, Savills
is a leading global real estate provider listed
on the London Stock Exchange.
Savills advises corporate, institutional and private clients, seeking
to acquire, lease, develop or realise the value of prime residential
and commercial property across the world’s key markets.
Savills is expert in delivering results across all key
commercial, retail, industrial and residential sectors
in the following areas:
Savills is a company that leads rather than follows with over 600
offices and associates throughout the UK, Europe, Americas, Asia
Pacific, Africa and the Middle East. With over 27,000 staff, we seek
out people who possess that rare mix of entrepreneurial flair and
rock solid integrity, and are focused on delivering clients with
advice and expertise of the highest calibre.
 Sales
A powerful combination of global connections and deep local
knowledge provides Savills with an almost unparalleled ability
to connect people and property.
Savills extensive Asia Pacific network spans 50 offices throughout
Australia, New Zealand, China, Hong Kong, India, Indonesia,
Japan, Korea, Macao, Malaysia, Myanmar, Philippines, Singapore,
Taiwan, Thailand and Vietnam.
In Australia, we offer the full spectrum of services from providing
strategic advice to managing assets and projects and transacting
deals. With a firmly embedded corporate culture that values
initiative, innovation and integrity, clients receive outstanding
service and can be assured of the utmost professionalism.
Adelaide
+61 (0) 8 8237 5000
Brisbane
+61 (0) 7 3221 8355
Canberra
+61 (0) 2 6221 8200
Gold Coast
+61 (0) 7 5509 1700
Melbourne
+61 (0) 3 8686 8000
Notting Hill
+61 (0) 3 9947 5100
Parramatta
+61 (0) 2 9761 1333
Perth
+61 (0) 8 9488 4111
Sunshine Coast
+61 (0) 7 5313 7500
Sydney
+61 (0) 2 8215 8888
savills.com.au
 Leasing
 Valuations
 Asset Management
 Project Management
 Strategic Corporate Real Estate Services
 Property Accounting
 Facilities Management
 Luxury Residential Sales
 Residential Projects
 Research
For Advice that gives Advantage, contact Savills.