The big property groups love talking about their premium assets. Unfortunately, they need markets to settle down before investors are willing to listen.
Get a bunch of big-name property CEOs in front of a room full of investors and where does the discussion head?When will the bloodshed stop? What’s happening with all-important capitalisation rates? What about lease incentives? Can second-tier properties be easily converted into something else like apartments, or have their green credentials easily upgraded to create value?David Rowe
In Sydney, anything between Martin Place and Circular Quay – the sorts of buildings you will find most investment banks and law firms – is red-hot. Floor space is tight.Only three blocks west, there is available floor space in “abundance”, according to Mirvac boss Hanan. He says most tenants will move to a better location for the same rent – that’s the way the industry works. It’s cyclical; periods of oversupply creates vacancy, which creates more lease incentives, which has traditionally drawn tenants into better office buildings.
The other way office owners can add value is by boosting their buildings’ green credentials – and there are specialist investors and investment funds raised to turn buildings green.
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