SYDNEY OFFICE 1.6% 5.9% $916 PRIME GROSS GROWTH (QoQ) TOTAL VACANCY RATE (Q2 2017) PRIME GROSS (PER SQ M) HIGHLIGHTS Big lease deals rebound in Q3 After a Q2 in which smaller deals dominated the Sydney CBD office leasing market, Q3 rebounded as expected with multiple large deals. This included Clayton Utz renewing 17,000sq m of their Premium grade space at 1 Bligh Street. The NSW Government (Jobs for NSW) also struck a large lease agreement, signing on to 17,000 sq m on floors 1 to 11 in the refurbished B Grade 11-31 York Street for its start-up hub. Global IT firm Dimension Data also took 6,000 sq m at Darling Park s Tower 3. Strong prime absorption drives vacancy lower The trend of above average prime grade net absorption continued with H1 2017 marking the sixth consecutive half year of above average take-up of stock. On this uptake, vacancy declined, with the Premium rate compressing 300 basis points to 9.5% while A grade, down 50 basis points to 3.6%, recorded its lowest rate since mid 2008. Prime rent growth bounces back After muted gross effective rental growth in Q2 a bounce back was recorded in Q3. Prime gross effective rents, up 1.6% QoQ and 6.9% YoY, were underpinned by an increase in face rent growth and a 50 basis point decline in incentives to move to $916 per sq m per annum. B grade gross effective rents tracked sideways at $729 per sq m with face rent growth stabilising, while gross incentives remained at circa 20%. ECONOMIC INDICATORS GDP Growth (National)* State Final Demand Growth (NSW)* Unemployment (NSW) Q1 17 2.3% 3.9% 5.1% PRIME GROSS, PRIME VACANCY (6 MONTHLY) Rent (A$/sq m/yr) Q2 17 3.3% 4.8% *Average annual growth rate, Seasonally adjusted Source: ABS; Deloitte Access Economics; Cushman & Wakefield Research $1,000 $850 $700 $550 12-Month Forecast $916 Gross Effective Rent Vacancy Rate (%) SUPPLY PIPELINE 200 Net Lettable Area ( 000 sq m) 150 100 50 0 10 year avg. = 83,000 sq m 15% 10% 5% 0% 2017 2018 2019 2020 2021 Vacancy Rate (%)
SYDNEY OFFICE Dominic Brown Head of Research, Australia & New Zealand Level 22, 1 O Connell Street Sydney, NSW 2000 Australia Tel: +61 (0)431 947 161 dominic.brown@cushwake.com SUBMARKET INVENTORY* VACANCY RATE* PLANNED & UNDER GROSS A$/SQ M/YR US$/SQ M/YR EUR/SQ M/YR Premium 1,124,107 9.5% 256,000 1031 821 687 A Grade 1,864,975 3.6% 22,000 846 674 563 B Grade 1,416,735 5.8% 0 729 580 485 SYDNEY CBD TOTAL^ 5,086,316 5.9% 278,000 ^All-Grades, Planning Approved, *As at 30/06/2017 AUD/USD = 0.7963; AUD/EUR= 0.6660 as at 18th September 2017 Key Leasing Transactions Q3 2017 PROPERTY SUBMARKET TENANT SQ M LEASE TYPE 11-31 York Street Western NSW Government 17,000 Direct 1 Bligh Street Core Clayton Utz 17,000 Renewal Darling Park Tower 3, 201 Sussex Street Western Dimension Data 6,000 Direct Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 45,000 employees in more than 70 countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients ideas and putting them into action. To learn more, visit www.cushwakecentennial.com, or follow @CushWake on Twitter. Pier 8/9, Hickson Road Walsh Bay Clemenger BBDO 4,200 Direct Significant Projects Under Construction PROPERTY SUBMARKET MAJOR TENANT SQ M COMPLETION DATE 100 Broadway, Central Park Southern 5,500 2018 Q3 151 Clarence Street Western ARUP 22,000 2018 Q4 60 Martin Place Core 38,600 2019 Q4 10 Carrington Street Core NAB 59,408 2020 Q1 Copyright 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.
MELBOURNE OFFICE 6.9% 6.5% 358,000 PRIME NET GROWTH (YoY) TOTAL VACANCY RATE (Q2 2017) SQ M OF NEW STOCK UNDER HIGHLIGHTS Land taxes hit outgoings In Q3 tenant outgoings increased as landlords passed on higher land tax expenses ECONOMIC INDICATORS GDP Growth (National)* State Final Demand Growth (VIC)* Q1 17 2.3% 3.6% Q2 17 3.9% 12-Month Forecast stemming from recent land revaluations. For prime grade outgoings this equated to a QoQ increase of 7%, while B grade outgoings increased by 10%. Landlords have also been exposed to increased electricity costs caused by volatility and uncertainty in the electricity market. Unit rates on multi-year electricity supply contracts have significantly increased on previous years, and this has started to flow back to tenants. Prime vacancy tightens, prime rents increase Prime vacancy sharpened 40 basis points to 6.1% in H1 2017. Although there was a lack of contiguous stock Prime net absorption matched the historic average. Tighter vacancy drove further rent growth, especially for Premium grade assets. Prime net effective rents now sit at $376 p/sq m per annum, up 1.2% QoQ and 6.9% YoY. Unemployment (VIC) 6.1% PRIME NET, PRIME VACANCY (6 MONTHLY) Rent (A$/sq m/yr) 5.9% *Average annual growth rate; Seasonally adjusted Source: ABS; Deloitte Access Economics; Cushman & Wakefield Research $400 $350 $300 $250 $376 Net Effective Rent Vacancy Rate (%) 9% 6% 3% 0% Vacancy Rate (%) Developers still vying for multiple large tenants A who s-who of developers including Lendlease, Cbus and Mirvac are behind 12 office towers in the CBD that are under construction or have planning approval. Landlords are jostling to secure large requirements, and pre-commitment rumours are aplenty. Placement of such tenants is expected to provide market clarity and backfill opportunities for smaller tenants, which are expected to be active over the coming year. SUPPLY PIPELINE Net Lettable Area ( 000 sq m) 300 200 100 10 year avg. = 104,000 sq m 0 2017 2018 2019 2020 2021
MELBOURNE OFFICE Dominic Brown Head of Research, Australia & New Zealand Level 22, 1 O Connell Street Sydney, NSW 2000 Australia Tel: +61 (0)431 947 161 dominic.brown@cushwake.com SUBMARKET INVENTORY* VACANCY RATE* PLANNED & UNDER NET A$/SQ M/YR US$/SQ M/YR EUR/SQ M/YR Premium 751,400 6.1% 147,000 446 355 297 A Grade 2,257,779 6.1% 380,000 353 281 235 B Grade 875,344 6.6% 0 265 211 176 MELBOURNE CBD TOTAL^ 4,550,598 6.5% 527,000 ^All-Grades, Planning Approved, *As at 30/06/2017 AUD/USD = 0.7963; AUD/EUR= 0.6660 as at 18 th September 2017 Key Leasing Transactions Q3 2017 PROPERTY SUBMARKET TENANT SQ M LEASE TYPE 800 Collins Street Docklands Latitude Financial Services 9,744 Direct 333 Collins Street Western Core Recoveriescorp 3,562 Direct 333 Collins Street Western Core Deutsche Bank 2,000 Renewal Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 45,000 employees in more than 70 countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients ideas and putting them into action. To learn more, visit www.cushwakecentennial.com, or follow @CushWake on Twitter. Significant Projects Under Construction PROPERTY SUBMARKET MAJOR TENANT SQ M COMPLETION DATE 664 Collins Street Docklands Pitcher Partners 25,600 2018 Q3 Collins Square Tower 5 Docklands Transurban 40,000 2018 Q4 One Melbourne Quarter, 695 Collins Docklands ARUP 26,400 2018 Q4 839 Collins Street Docklands ANZ 38,000 2019 Q2 271 Spring Street North Eastern Australian Unity 15,600 2019 Q3 311 Spencer Street Docklands Victoria Police 65,500 2019 Q4 447 Collins Street Western Core King & Wood Mallesons 49,000 2019 Q4 80 Collins Street Eastern Core Macquarie Group 40,000 2020 Q1 477 Collins Street Western Core Deloitte 58,000 2020 Q2 Copyright 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.
BRISBANE OFFICE 1.1% 15.7% 48,000 PRIME GROSS GROWTH (YoY) TOTAL VACANCY RATE (Q2 2017) SQ M CONFIRMED SUPPLY HIGHLIGHTS Prime market leading the recovery Annual prime net absorption to July 2017 of 111,788 sq m saw vacancy decline from ECONOMIC INDICATORS GDP Growth (National)* State Final Demand Growth (QLD)* Q1 17 2.3% 1.3% Q2 17 12-Month Forecast 15.5% to 11.7%. While some of this has been driven by the completion of new stock, tenants are also choosing to upgrade office accommodation while the market remains tenant favorable. In light of this, prime rents have remained little changed with 1.1% growth YoY on a gross effective basis. Tenants driving a flight to fit-out Given vacancy across building grades remains above the long-term average, landlords continue to compete for tenants. Strategies have included refurbishing floor space, upgrading building services and offering speculative fit-outs; which have become increasingly common and offer smaller-sized tenants a cost effective turn-key solution. Stronger demand outlook The Brisbane CBD office market is emerging from the worst of the downturn in tenant demand. Looking to the future, stronger economic growth across the majority of sectors is forecast over the next five years, which coupled with limited near-term supply and extensive infrastructure projects shaping the CBD should see vacancy trend downwards. We expect the pace of recovery to gather momentum in 2018 and bring with it stronger rental growth. Unemployment (QLD) PRIME GROSS, PRIME VACANCY (6 MONTHLY) SUPPLY PIPELINE 80 6.3% 6.5% *Average annual growth rate, Seasonally adjusted Source: ABS; Deloitte Access Economics; Cushman and Wakefield Research Rent (A$/sq m/yr) Net Lettable Area ( 000 sq m) $500 $450 $400 $350 60 40 20 $446 $446 Gross Effective Rent Vacancy Rate (%) 10 year avg. = 60,000 sq m 0 2017 2018 2019 18% 12% 6% 0% Vacancy Rate (%)
BRISBANE OFFICE Dominic Brown Head of Research, Australia & New Zealand Level 22, 1 O Connell Street Sydney, NSW 2000 Australia Tel: +61 (0)431 947 161 dominic.brown@cushwake.com SUBMARKET INVENTORY* VACANCY RATE* PLANNED & UNDER GROSS AUD/SQM/YR USD/SQM/YR EUR/SQM/YR Premium 335,470 11.8% 0 556 443 370 A Grade 918,330 11.6% 48,000 408 325 272 B Grade 750,232 20.0% 0 303 241 202 BRISBANE CBD TOTAL^ 2,279,725 15.7% 48,000 ^All Grades, *As at 30/06/2017 AUD/USD = 0.7963; AUD/EUR = 0.6660 as at 18th September 2017 Key Leasing Transactions Q3 2017 PROPERTY GRADE TENANT SQ M LEASE TYPE 123 Eagle Street Premium Deloitte Australia 6,000 Renewal 140 Creek Street A DSITI ~ 3,000 New 1 Eagle Street Premium QLD Electoral Commission 1,822 New Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 45,000 employees in more than 70 countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients ideas and putting them into action. To learn more, visit www.cushwakecentennial.com, or follow @CushWake on Twitter. Significant Projects Under Construction PROPERTY GRADE MAJOR TENANT SQ M COMPLETION DATE 300 George Street A N/A 48,000 Q2 2019 Copyright 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.
CANBERRA OFFICE $352 5.2% 4.5% PRIME GROSS ($/SQ M PER ANNUM) SFD GROWTH (AVG. ANN) UNEMPLOYMENT RATE (ACT) HIGHLIGHTS ACT economy leads service sector states In Q2 Canberra s State Final Demand growth again exhibited strength. It led all service ECONOMIC INDICATORS GDP Growth (National)* State Final Demand Growth (ACT)* Q1 17 2.3% 6.5% Q2 17 5.2% 12-Month Forecast sector based states, and was second to only the more volatile Northern Territory (NT) overall. Unemployment in the ACT remained tight at 4.5% and is expected to receive a boost from construction of stage 1 of the Canberra light rail, which is now underway. New development completed in Tuggeranong The completion of one major office development in Canberra has been met with commencement of another. In Tuggeranong, Cromwell s 30,000sq m A grade development has reached completion and will be occupied by the Department of Social Services from late September 2017. In the city, demolition of the former AFP building on Mort Street & Northbourne Avenue has commenced. Developer Amalgamated Property Group will construct an 18,000sq m building which, upon completion in mid 2019, is expected to be Canberra s first Premium grade building. Education providers active on Barry Drive The Union Court Redevelopment at the Australian National University campus has resulted in the forced relocations of a number of educational providers. Landlords on nearby Barry Drive have been the benefactors, with multiple deals reached in the secondary grade circa 500 sq m category. Unemployment (ACT)^ 3.7% PRIME GROSS, PRIME VACANCY (6 MONTHLY) Rent (A$/sq m/yr) Net Lettable Area ( 000 sq m) 4.5% *Average annual growth rate; ^Trend Source: ABS; Deloitte Access Economics; Cushman & Wakefield Research $400 $350 $300 $250 $352 Gross Effective Rent Vacancy Rate (%) SUPPLY PIPELINE 120 80 40 0 10 year avg. = 96,000 sq m 15% 10% 5% 0% 2017 2018 2019 2020 2021 Vacancy Rate (%)
CANBERRA OFFICE Dominic Brown Head of Research, Australia & New Zealand Level 22, 1 O Connell Street Sydney, NSW 2000 Australia Tel: +61 (0)431 947 161 dominic.brown@cushwake.com SUBMARKET INVENTORY* VACANCY RATE* PLANNED & UNDER GROSS AUD/SQ M/YR USD/SQ M/YR EUR/SQ M/YR Prime 1,077,437 9.4% 18,000 352 280 234 Secondary 1,260,613 13.2% 0 CANBERRA TOTAL^ 2,338,050 11.4% 18,000 ^All Grades Planning Approved, *As at 30/06/2017 AUD/USD = 0.7963; AUD/EUR= 0.6660 as at 18th September 2017 KEY RECENT LEASING TRANSS PROPERTY SUBMARKET TENANT SQ M LEASE TYPE 1 National Circuit Barton Department of Prime Minister & Cabinet 15,398 Renewal 15 Bowes Place Phillip Department of Prime Minister & Cabinet 11,513 Renewal Constitution Place Development Civic King & Wood Mallesons 1,650 Pre-Commitment 2 Constitution Avenue Civic NACCHO 1,000 Direct 15 Barry Drive Turner Study Group 544 Direct SIGNIFICANT PROJECTS UNDER PROPERTY SUBMARKET MAJOR TENANT SQ M COMPLETION DATE Civic Quarter Civic 18,000 Q3 2019 Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 45,000 employees in more than 70 countries help occupiers and investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. 2017 marks the 100-year anniversary of the Cushman & Wakefield brand. 100 years of taking our clients ideas and putting them into action. To learn more, visit www.cushwakecentennial.com, or follow @CushWake on Twitter. Copyright 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.