Issue 10 March 2009
Industrial Property Commercial Property Property Management
In this issue:
Market updates Pages 4 - 12
Property Management Page 13
Expert advisors Pages 13 - 15
A message from Glen Wright Page 16
Opportunity Everywhere in 2009 for sale. It would appear that they are not getting out of the market altogether, as most have significant land banks and will be continuing to develop new buildings for corporate tenants.
2009 is the year money invested in other asset classes will move back into property, chasing good returns and the security of bricks and mortar. Investment As 2008 drew to a close, the investment trust sector sold off property at new record levels as they looked to reduce debt. This trend will continue for most of 2009. In the industrial market, the majority of property being sold was in the $5m to $20m price bracket − mostly single tenancy type properties, with a few larger multi-tenancy complexes. We expect to see more properties of this type come onto the market in 2009. The majority of last year’s sales were to wealthy private investors who have taken advantage of yields between 7.5% and 9%. The coming year brings a great opportunity to buy “generational type property” – something you would buy and give to the next generation. By this we mean quality property in an excellent location, with good longterm tenants and very cheap borrowing costs. Those able to buy in the $5m to $20m bracket should keep an eye on the larger institutional players and what they choose to release
For the smaller investors, it is certainly time to leave the stock market behind and stick with bricks and mortar in what will be a low interest rate environment. Developers who have vacant stock and newly leased stock are also willing to look at attractive deals. We expect to see a great deal of activity in the $1m to $5m price range as owners look to reduce debt and sell some property. In this price range, we expect to see yields maintained at 7.5% to 8.5%.
Owner Occupiers The market towards the end of 2008 was still very strong for owner occupiers as people who were confident with their businesses moved to owning rather than renting (Wright Property was one of these in 2008 – see separate article page 3). We believe this market will hold up well and expect to see a steady stream of business owners continuing to invest in their own properties. The banks are certainly still willing to lend money for property and generally the loan to debt ratios are in the area of 30% to 40% equity, 60% to 70% debt. Continued next page
Industrial Property | Commercial Property | Property Management
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Continued from page 1 Vacancy rates across all industrial sectors of Brisbane are still low and we expect this to continue, unless there is a major down turn in the economy and we see more mortgagee sales. Prices of vacant buildings have not softened at this stage unless the vendor has some pressure to sell, but certainly vendors are willing to look at offers and do deals, once again to reduce debt or take a profit.
Tenants
Developers Land developers are feeling the strain of a weaker market, with land sales at an all time low. Banks are more inclined to lend to owner occupiers for existing buildings while speculative building developers – those that specialise in small units and freestanders – have all pulled back in the past six months. As a result, the sale of fully serviced vacant land in some of the new estates has slowed dramatically. We do not expect this to turn around until the market picks up, possibly in the second half of 2009. This presents a great opportunity for owner occupiers and building developers to buy land with long settlement terms (3 to 6 months) and at prices 10% lower than what they were last year. Lower interest rates will however keep a lid on holding costs and make it easier for owners to hold out on price but most will want to move stock. LandMark White’s Brisbane industrial research suggests that land values now range from $260 to $550 per square metre. Speculative developers are still achieving between $1,800psqm and $3,250psqm for new stock, but the rate of sales has slowed dramatically. In recent years, a 10-unit project would normally be at least 50% sold prior to completion. Now it is more likely to be around 25% pre-sales.
Index
We do not expect to see a lot of construction in 2009 in this area, except for projects currently under way. This may lead to pent up demand in 2010, so developers should be looking at 2009 as a good year to get approvals ready and project pricing locked in. Construction prices may also come back due to builders and subcontractors being keen to get work going.
Most investors will be feeling nervous about their tenants in 2009 and 2010, so from an owner’s point of view, your bank guarantee has never been more valuable. We are still recommending a minimum of 6 months in all agreements to lease. This is a crucial time to ensure your tenants are paid up and outgoings are kept in check. This is a good time to have someone in the middle talking to your tenant and making sure everything is moving in the right direction. Over the next two years, owners are going to be more willing to keep tenants, rather than lose them through harsh market reviews. Most owners will be looking for early commitments from tenants and while some market rent increases will be likely, we would expect that in a quieter market, most owners will accept that a happy tenant is better than a vacant building. LMW forecasts slowing rental growth (averaging only 0.63% in Brisbane in 2009), and then 3.46% per annum over the next five years. We see 2009 as a year of opportunity for those with cash or equity to take advantage of the low interest rate cycle. We can’t expect to see a lot of growth in the medium term and the market could be quite static until 2010. However 2009 is a year to ask yourself would you rather have a property title or a share certificate under your pillow?
1-2 Opportunity Everywhere
10 State of the Art Development
3
Wright Property Expands in Size and Service
11 Western Corridor Update
3
New Website Launched with Brand Extension
12 Industrial Unit Developments
4
City Fringe Update
12 Management Key Issues
4
CMI Electrical Settles at Virginia
13 Wright Property Management 2009
5
Northside Update
13 Priority: Maintaining Demand Priority
5
Expansion Drives Need for Bigger Premises
6
Australia TradeCoast Update
14 Holding Redlich: Landlords and Purchasers (how to protect yourself in
7
$18mil Freehold Land Sale
7
$10mil Benchmark Industrial Sale
7
CMA Recycling set for Expansion
15 Napier Blakely: Identifying untapped income streams from property investments
8
Port Precinct Update
15 LandMark White
8
Riverport - The New Address for Business
16 A Message from Glen Wright
9
Southern Brisbane Industrial update
16 Polo News
9
Acacia Ridge Business Park
10 South East Corridor Update
a tightening market)
Serious Investments
There has never been a better time to secure some of Brisbane’s best industrial investments. We currently have numerous assets For Sale; 5 to 15 year leases, modern tilt panel and metal clad buildings, returns ranging from 7.5% to 9%, great locations such as Eagle Farm, Pinkenba, Acacia Ridge, Wacol and various other industrial precincts, motivated vendors will consider due diligence and finance conditions to bona fide purchasers. Professionally managed assets with excellent tenants most with 6 month bank guarantees, price ranges from $5,000,000 to $40,000,000. Prospective investors please contact Fiona Eady on (07) 3852 2280 to arrange a direct presentation with Glen Wright.
Wright Property Expands in Size and Service
HOT TOPIC
November 2008 saw Wright Property move into new stylish, corporate headquarters at 5 Edmund Street, Newstead. Centrally located, the 1,000sqm property was purchased in early 2008 and DA plans were lodged for a four storey 2,000sqm office building. Approval was granted in August however; given the economic uncertainty at that time, the decision was made to refurbish the existing building on the site and move into what can only be described as an ideal business environment! The site has 16 onsite car spaces with excellent accessible visitor car parking at the front of the building in addition to extra space internally for the business to continue to grow. Wright Property currently has 22 staff in total across both the Newstead and Eight Mile Plains offices. Incorporated into these staff numbers is the further expansion of the commercial division to manage the ever growing city fringe market. Matthew Young has recently joined the Wright Property team to work closely with Regan Baker to continue the momentum that Wright Property has established in the commercial market. Wright Property is located 5 to 10 minutes from most city fringe buildings which enables the team to get straight in their car and meet a tenant or owner at their building in a short period of time”. The expansion of the commercial division will enable Wright Property to continue to build their profile of being the best in the business and to exceed industry expectations. Wright Property is always looking for people with knowledge and expertise in commercial property, industrial property and property management, if you would like to become part of the dynamic Wright Property Team, contact Fiona Eady on 07 3852 2280 to arrange an interview.
New Postal Address PO Box 3061, Newstead QLD 4006
Wright Property Head Office, 5 Edmund St, Newstead
New Website Launched with Brand Extension Wright Property once again launched a more innovative internet site that provides its users with the ease of not only finding relevant information quickly but also allowing the site visitors to access up-to-date information on what properties are for sale/lease and the latest market commentary. The site is an interactive gateway for information gathering and updates. Reflected in the site is also the brand extension of the Group. Wright Property has been strongly known in the market as “Seriously Industrial” however, still offering services in other markets. It was recognised from several business transactions that there was a need to extend and educate the market on this as the service we were providing our clients was also incorporating a heavy emphasis on commercial business and Property Management. Wright Property has now extended its corporate image to include not only “Seriously Industrial” but also “Seriously Commercial” and “Seriously Property Management”.
Visit our new website www.wrightproperty.com.au Industrial Property | Commercial Property | Property Management
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City Fringe Update • 28 Russell Street, South Brisbane, leased for $95,000pa (621sqm building) • 1/75 Longland Street, South Brisbane, leased for $80,000pa (661sqm building on 3,298sqm site) Wright Property has been appointed exclusive market agents, in conjunction, on the a new 3 storey office development situated at 22 Wandoo Street, Fortitude Valley.
West End, Fortitude Valley, Newstead, Bowen Hills, Albion, Newmarket, Stafford, East Brisbane, South Brisbane, Woolloongabba, Kangaroo Point, New Farm The Brisbane fringe office market is the largest non-CBD office market nationally containing 840,000sqm of lettable space and is heading towards 1 million square meters within the coming two years. The turbulence that started in 2008 will continue to influence the market in the first half of 2009, however, the continuing demand for space in the city fringe precincts, particularly suburbs located between 5km and 10km of Brisbane’s CBD, makes the City Fringe a strategic area for growth moving forward in 2009. After years of continual strong commercial rental growth across the entire Brisbane fringe office market, we started to see vacancy rates ease toward the end of 2008, with availability of credit being scarce and business & consumer confidence low. Despite the financial market uncertainty there has still been over $150 million of Brisbane commercial property priced under $10 million change hands since April of 2008, mostly in the CBD fringe. Further interest from investors & owner occupiers is expected to pick up in 2009 following the announcement of further interest rate reductions in the coming months. Some notable transactions in the second half of 2008 include: • 44 Jordan Tce, Bowen Hills sold for $6,000,000 (2,000sqm building on 3,500sqm land) • 5 Edmund Street, Newstead, sold for $3,050,000 (506sqm office on 985sqm site purchased by Wright Property – see article on page 3) • 143 Melbourne Street, South Brisbane sold for $1,685,000 (190sqm building on 372sqm site) • 19 Nariel Street, Albion sold for $495,000 (112sqm building on 465sqm site) • 54 Arthur Street, Fortitude Valley, leased for $90,000pa (375sqm building on 246sqm site)
The property is located on Wandoo St directly across from the James St markets offering outstanding amenity with high quality cafes and boutique shopping within a short walk. The building offers three floors of 365sqm. Each floor will feature the highest level of commercial fittings and include 5 secure basement car parks. The building is currently under construction with completion due in the second quarter of 2009.
22 Wandoo Street, Fortitude Valley
CMI Electrical settles in at Virginia After 12 months looking for a suitable site to expand their business on the northside, CMI Electrical leased a 2,000sqm facility at 57 Yarraman Place, Virginia. Wright Property Sales and Leasing Executive Cameron Heim said that the site was a perfect fit for CMI, the location of the property in Yarraman Place allows for easy access to the major arterial networks, such as Sandgate Road, Toombul Road and the Gateway Motorway. The property features office space over two levels at the front of the building with 1,400sqm of clearspan warehouse. The site is fully concreted for excellent storage and truck movements on site. The building has been leased for $211,444pa + Outs + GST on a long term lease.
Northside Update
• 16/129 Robinson Road, Geebung $103,500pa (1,035sqm building) • 7/50 Northlink Place, Virginia $20,000.00pa (120sqm unit on 2,514sqm site)
Banyo, Northgate, Geebung, Hendra, Virginia, Brendale The northern industrial suburbs of Geebung, Virginia, Zillmere, Northgate, Banyo and Hendra have once again seen plenty of activity, with majority of the transactions taking place in the leasing market. These suburbs are in high demand due to the proximity to the major transport networks of the Gateway Motorway Arterial, Domestic & International Airports and within 20 mins of the CBD. Current infrastructure projects in the area, including the Governments duplication of Gateway Motorway Bridge and the new Airport link tunnel and Airport roundabout upgrade, will allow for even better access to northern industrial areas. Less congestion around the Airport roundabout and on the Gateway Motorway itself will allow businesses to operate their transportation more effectively. Many of the companies in the area are long term tenants and are holding off moving unless absolutely necessary, creating a demand from the tenant market for space up to 2,000sqm. Some notable lease transactions negotiated by Wright Property in the later part of 2008 include:
Other Leases in the area include: • 6 Armada Place, Banyo $340,000pa (2,550sqm brand new building) • 157 Granite Street, Virginia $167,740pa (1,476sqm building on 2,200sqm site) • 100 Northlink Place, Virginia $178,250pa (1,550sqm building on 2,221sqm site) There has still been a steady flow of sales in the area. Some notable sales transactions negotiated by Wright Property in the later part of 2008 include: • 6/26 Navigator Place, Hendra – investment sale, 230sqm unit sold for $475,000 with a 3 year $36,000pa lease • 69 Frederick Street, Northgate – investment sale, 1,515sqm building on 3,346sqm site sold for $2,550,000 with a 5 year $190,000pa lease • 87 Basalt Street, Geebung $870,000 (555sqm building on 1,12sqm site) Other sales in the area include:
• 57 Yarraman Place, Virginia $212,000.00pa (2,118sqm building on 4,294sqm site)
• 5 Basalt Street, Geebung $1,300,000 – multi tenanted investment
• Building 20/Hendra Distribution Park, Hendra $219,250pa (2,508sqm building)
• 46 Radley Street, Virginia - $3,725,000.00 (2,200sqm building on 4,199sqm site)
Expansion Drives Need for Bigger Premises Despite the financial market uncertainty big companies continue to expand and look for bigger premises. Aunger Carcraft, a national company that supplies and manufactures car accessories required a bigger building than the premises it had on Kingsford Smith Drive in Eagle Farm.
In a deal negotiated by Cameron Heim of Wright Property, Aunger secured itself a larger property at 55 Brownlee Street, Pinkenba. Aunger secured the 5,597sqm building on a 10,600sqm site with a long-term lease for $671,640pa. The location of the property was ideal for employees, with staff who catch public transport able to catch the same services just a few extra stops along to the new building. This property was also able to increase productivity and functionality for the tenant as its previous building was restrictive in its height and layout, the new building allowing for better racking. Aunger committed to the building prior to completion and was therefore able to have some say in the final fit-out of the warehouse and the office. 55 Brownlee Street, Pinkenba
Industrial Property | Commercial Property | Property Management
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Australia TradeCoast Update Eagle Farm, Pinkenba The Australia Trade Coast has continued to dominate the activity across Brisbane’s industrial suburbs. Private investors and to a lesser extent owner occupiers are still identifying well priced opportunities. Eagle Farm continues to set benchmarks for industrial sales in South East Queensland. In May 2008, Managing Director Glen Wright finalized the sale of 775 Kingsford Smith Drive to an owner occupier for close to $10 million, (see article next page). In the past 2 years Wright Property has settled more than $100mil worth of sales in Eagle Farm, completing more than 80% of all sales transactions in the area. Some of our more significant sales to occur in 2008 include: • 775 Kingsford Smith Drive, Eagle Farm $9,600,000 (4,513sqm building on 13,262sqm site) • 319 Fison Avenue, Eagle Farm $4,447,300 (2,600sqm building, 8,086sqm land) • 21 Lavarack Avenue, Eagle Farm $2,850,000 (1,498sqm building on 3,328sqm site) • 55 Harris Road, Pinkenba $18,000,000 (8.5ha future industrial development site) • 92 Brownlee St, Pinkenba $1,700,000 (5,198sqm land) • 180 Main Beach Rd, Pinkenba $5,250,000 (2ha future industry land) • 3/106 Fison Avenue, Eagle Farm $1,100,000 (490sqm) Land sales in Pinkenba have continued to stay strong despite the global financial crisis. In January 2009 Associate Director
Michael Callow finalized the settlement of 55 Harris Rd, an 8.5ha future industrial development site in Pinkenba (see article next page). The sale wraps up an impressive 3 years in Pinkenba for Wright Property. Since 2006, when development interest started in the area, Wright Property has negotiated almost 300,000sqm of land sales in the TradeCoast totaling more than $60,000,000. In 2008 leasing proved to be an appropriate option for businesses who would have preciously preferred to purchase. In the TradeCoast area Wright Property negotiated more than $3,000,000 in annual rental for almost 30,000sqm of space including: • 15 Chapman Place, Eagle Farm $250,000pa (1,650sqm building on 4,600sqm site) • 71 Lavarack Avenue, Eagle Farm $280,000pa (2,400sqm building on 4047sqm site) • 260 Lavarack Avenue, Eagle Farm $226,250pa (1,755sqm building on 4,500qm site) • 220 Lavarack Avenue, Eagle Farm $185,000pa (1,800sqm building on • 52 Savage Street, Pinkenba $400,000pa (3,386sqm building on 7,853sqm site) • 55 Brownlee Street, Pinkenba $671,640pa (5,597sqm building on 10,600sqm site) Other major happenings in the area include TradeCoast Central, located on the former Brisbane Airport site, adjacent to the Gateway Arterial Motorway, a fully integrated master planned corporate office park and industrial community with special emphasis on sustainable development and first class utility services.
$18mil Freehold Land Sale In a deal negotiated by Wright Property Associate Director Michael Callow, Australand have purchased a vacant parcel at Pinkenba for $18,000,000. The company plans to develop the 8.5ha site at 55 Harris Rd into a business park for larger users. The site is located at the end of Lomandra Drive and is one of the last large parcels of freehold land available for development in the Australia TradeCoast Precinct.
$10million Benchmark Industrial Sale
CMA Recycling set for expansion
Eagle Farm industrial site sets new benchmark for industrial sales.
CMA Recycling, a metals trading and recycling group, has found additional premises close to its existing Eagle Farm facility to accommodate its expanding operations. The company’s other facility is on Kingsford Smith Drive with only one property in-between the two premises, they are virtually their own neighbour.
An Eagle Farm industrial site at 775 Kingsford Smith Drive has changed hands in a deal worth close to $10 million, setting a new benchmark for industrial sales in South East Queensland. The Eagle Farm property attracted a great deal of interest from investors and developers due to the redevelopment potential of the site and the location on Kingsford Smith Drive. The 13,262sqm site, housing eight buildings totaling a NLA of almost 5,000sqm, was bought by a group of private investors. Wright Property Director Glen Wright negotiated the $9.6 million sale.
The company has signed a long-term lease on the site at 52 Savage Street, Pinkenba. The property has a 3,386sqm office/warehouse building on 7,853sqm of land. The facility is being leased for approximately $400,000pa. Wright Property Associate Director Michael Callow found the site for CMA and they immediately said they would take it - the deal negotiated in about three hours. Mr. Callow said CMA Recycling was not only attracted by the site’s location to its existing facility but also because it provides excellent yard and access.
Industrial Property | Commercial Property | Property Management
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Port Precinct Morningside, Queensport, Murarrie, Hemmant, Lytton and Fisherman Islands The market towards the end of 2008 was still strong for owner occupiers who were confident with their businesses. These companies continued to expand and look for opportunites to own rather than rent. For example; Idec Solutions, a supplier of pre-engineered building systems, purchased the site next door to their property. In a deal negotiated by Wright Property, the 1,683sqm building at 14 Wyuna Court, Hemmant sold for $2,162,500. Idec purchased the property for ‘future expansion purposes’, the acquisition to provide added environmentally sustainable capacity to Idec’s industrial protective coatings division in the adjacent property. Some other notable sales in the area in the second half of 2008 include:
Alexandra Avenue, Murarrie. In a deal negotiated by Wright Property Sales & Leasing Executive Luke Wray Aromas will lease the 798sqm premises, paying a rental rate of $150psqm. Murarrie was the preferred location for the tea and coffee merchant, as a lot of their business is now airport driven, it offers excellent access north and south via the Gateway Motorway, and also paying less rent then in the City Fringe. Other businesses following this trend include: • Energyworks leased 1,600sqm at 111 Benjamin Place, Hemmant at a rate of $135psqm •
Synnex moved to 57 Luke Street, Hemmant a 2,984sqm building at a rate of $127psqm
•
Millenium Feature Stone are now at 12 Steel Place, Morningside 1,338sqm at a rate of $125psqm
• Packsys found their new home at 19 Millenium Place, Tingalpa a 1700sqm building at a rate of $120psqm
• 1028 Lytton Road, Murarrie was sold to an owner occupier for $5,625,000
• Cesco Forbes moved to 38 Goodman Place, Murarrie a 4140sqm building paying a rate of $120psqm
•
•
15 Millenium Place, Tingalpa was sold to an owner occupier for $3,900,000
• 35 Paringa Road, Murarrie was sold to a developer for $8,750,000 •
Wright Property completed a 5 + 5 year lease at 42 Barku Crt Hemmant for $480,000 to a publically listed company. 11,000sqm waterfront site with a freestanding building approx 1,500sqm.
Unit 9 & 10 / 35 Paringa Road, Murarrie was sold for $1,687,000 to a private investor with a brand new 5 year lease in place to medical supplier Maquet Pty Ltd.
Port suburbs have maintained popularity with tenants. Businesses which have traditionally been in the inner city area are now moving out to the Port industrial and commercial precincts. Outgrowing its long-time West End base, Aromas Coffee has moved its head office and roastery to a larger premise at 2/60
Riverport: The New Address for Business Riverport at Murarrie is nearing completion - the 19 office and warehouse units in the development being constructed by award winning builder “Spaceframe” offers units from 199sqm with prices starting at $570,000. The location adjoining the Rivergate Marina complex and with river views is in an unrepeatable position with 5 units sold off the plan prior to completion which is due towards the end of March this year. Four of the units sold have been to companies in the medical industry so there is a high tech/clean business park following so far for the project. The development also has a 3 level office building offering 2,910sqm making this a truly unique business park environment. Glen Wright, Managing Director of Wright Property states: “we have only 14 office and warehouse units left and they will sell very well when complete. Where do you get industrial units next to a marina and this close to the city and airport”.
Please contact Glen Wright or Luke Wray regarding this development.
42 Barku Crt, Hemmant
New incentive offers from the developer include: • 8% rental guarantee for 12 months from settlement to investors for 5 of the units in the $570,000 to $1.2m price range; and • $50,000 fit out packages to owner occupiers who wish to get in early while the finishing touches to the units are being complete. In regards to the 3 level office building we have 1,000sqm floor plates which are serviced by two lifts and each level has river views. With all approvals in place and the foundations under way, we would be able to get users in place by the end of this year. The asking rental is $350psqm which is very competitive for brand new high quality office space, car parking is 1 per 30sqm. The office is also for sale at $5,000psqm.
Southern Brisbane Industrial update
• 150 Beatty Road, Archerfield $104,700pa (1,047sqm building on 2,025sqm site)
Acacia Ridge, Archerfield, Coopers Plains, Moorooka, Salisbury, Rocklea This traditional industrial precinct remains very popular with local businesses and has seen very low vacancy from mid 2008 to date. The area has enjoyed strong leasing interest during 2008 especially in the 1,000sqm to 2,500sqm size range. Net rentals have remained firm, with existing property rates between $105 and $110psqm and near new tilt panel buildings leasing for between $120 and $130psqm. Some notable lease transactions negotiated by Wright Property in the second half of 2008 include: • 80 Colebard Street East, Acacia Ridge $190,850pa (1,735sqm building on 3,268sqm site)
The second half of 2008 saw strong leasing take-up in the area. Greenfield Mowers committed to 5,700sqm at Fox Road Acacia Ridge. Goodman, who are constructing the new facility at Fox Road (see article next page), have also signed another 5,750sqm pre-lease to Salmat at 338 Bradman Street, Acacia Ridge. CS Gas, Mahindra Tractors and a tyre company also leased properties in Acacia Ridge totaling 8,000sqm. Wright Property extended our capability into the commercial property area to assist our valued clients in their commercial projects. Byron Griffith has pre-leased a new bulky goods facility at Browns Plains to a gymnasium for $465,000pa on a 10 year lease and Wright Property was appointed to lease a commercial project at Salisbury with Property Management, a refurbishment, 1 lease renewal and 5 new leases.
• 37 Activity Street, Acacia Ridge $138,000pa (1,315sqm building on 4,045sqm site)
Sales in the area were dominated by owner occupies of premises up to 3,000sqm. Notable sale transactions negotiated by Wright Property in the second half of 2008 include:
• 27 Activity Street, Acacia Ridge $160,000pa (1,707sqm building on 4,447sqm site)
• 100 Musgrave Road, Coopers Plains $1,750,000 (1,672sqm building on 4,032sqm site)
• 5/74 Murdoch Circuit, Acacia Ridge $161,738pa (1,335sqm building)
• 14 Annie Street, Coopers Plains $825,000 (530sqm building on 812sqm site)
• 280 Bradman Street, Acacia Ridge $204,820pa (1,862sqm building)
• 528 Seventeen Mile Rocks Road, $2,250,000 (2,012sqm building on 4,047sqm site)
• Fox Road, Acacia Ridge pre-commit $670,000pa (5,700sqm building)
• 38 Macbarry Place, Rocklea $2,400,000 (1,460sqm building on 2,800sqm site)
• 1427 Ipswich Road, Rocklea $ $213,575pa (1,709sqm new tilt panel building)
• 24 Perrin Place, Salisbury $3,300,000 (2,154sqm building on 4,499sqm site)
• 576 Boundary Road, Archerfield $180,000pa (1,100sqm building)
• 181-189 Musgrave Road, Coopers Plains $2,380,000 (600sqm building on 5,382sqm site) PRIME SITE • 178 Beatty Road, Archerfield $4,800,000 (3,482sqm buildingRidge, on 9,700sqm new home at Acacia wheresite) the grass is greener
• 1/70 Johnson Road, Hillcrest $160,000pa (1,780sqm building)
8
Upper M Gravatt homes popular
Acacia Ridge Business Park
Michelle Hele
Greenfield Movers, a manufacturer of ride-on movers, domestic lawn mowers, chippers and shredders has secured a new home in Acacia Ridge Business Park. After the sale of their existing premises to an owner occupier, Greenfield Mowers, who have been located in Acacia Ridge for more than 20 years, needed to find new premises. However, with vacancy very tight in the area there was a short supply and little to choose from. The company was pleased to secure a purpose-built facility in the heart of Acacia Ridge. In a deal negotiated by Wright Property Director Aaron Dahl, the group committed to a new 5,700sqm building under construction at Fox Road in the Acacia Ridge Business Park. The space has been leased for 10 years with a 10 year option. Greenfield
will join other major tenants including SPAR supermarkets and Woolworths on the 80,000sqm estate.
A RESIDENTIAL development in Mt Grav has begun chalking up significant sales with alm two-thirds of apartments worth about $6.5 million already changing hands. To date 16 of the 22 residential units in the Norton Street Apartmen development have sold. There are also two commercial areas availa on the ground floor. Sales in the project, at Norton St, Upper Mt Gravatt, have been to bot investors and owneroccupiers. The development is scheduled to wrap up by end of this month. It features two and thr bedroom apartments and within a few minutes walking distance of the Westfield Garden City Shopping Centre. The latest PRDnationwide suburb profile of Mt Gravatt reveals house sales grow in the past five years has been 14.8 per cent. Yolanda van Diggelen from PRDnationwide wh marketing the developme said she had seen inquirie jump since the federal government decision to triple the first home buye grant on new properties.
Integrated property group Goodman is constructing the new facility and can put out the no vacancy sign after Greenfield moves in. The new building was purpose built to meet Greenfield’s requirements and was higher than their previous www.townsvillekirwan.harcourts.com. premises allowing for more efficient racking.
ON track . . . from left, Greenfield’s Lewis Reinhold with Ross Edwards of Goodman International and Aaron Dahl of Wright Property.
)8// )/225
Picture: Sarah Marshall
Balgal Beach Lot 2 O’connor Road
Beach Front Develop - Cash Buyers Wanted Right Now
&%' 675$7$ Industrial Property | Commercial Property | Property Management /HYHO (GZDUG 6WUHHW VTP DSSUR[LPDWHO\ :HOO SUHVHQWHG RIÂżFH VSDFH
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This 85.19 Hect of prime beach front land suitable for resort development, will be sold so get in now. Not much of th type left. The DA is approved. The owner has said “sell!� Suitable for a wide range of uses. Call Mark 0418 186374 DA etc. Will look at all offers prior to auction.
AUCTION Tuesday the 9th of December 2008 7pm - In rooms Ibis Hotel Palmer Street South Townsville. VIEW: www.townsvillekirwan.harcourts.com.au ID# QTV080405
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South-East Corridor Update Yatala Enterprise Area, Loganholme, Meadowbrook, Crestmead, Slacks Creek and Underwood Sales turnover in the second half of 2008 in the South East corridor was modest in comparison with the previous 12 months. However, there was a significant increase in the number of leasing transactions, providing evidence of a continuing high level of underlying demand and business growth within many sectors. Wright Property Sales and Leasing Executives Scott Dalton and Paul Dugan negotiated a number of leasing transactions in this area, with leasing rates for new stock between $115-$135psqm and secondary stock between $95-$110sqm. Some notable leasing transactions completed by Wright Property during this period include: • Insight Logistics Park, Stapylton (11,500sqm) – see article this page • 65 Magnesium Drive, Crestmead $220,320pa (1,632sqm building) • 1/116 Magnesium Drive, Crestmead $238,050pa (2,070sqm building) • 62 Platinum Street, Crestmead $115,000pa (800sqm building) • 17 Monte-Khoury Drive, Loganholme $113,000pa (1,026sqm building on 2,000sqm site) • U3 & U4 13-15 Octal Street, Yatala $220,000pa (1,103sqm & 1,007sqm units)
• 6-55 Christensen Road, Stapylton $130,368pa (1,159sqm building on 2,190sqm site) • 6 Dan Street, Slacks Creek $90,000pa (1,038sqm building on 1,629sqm site) While leasing demand has increased, there has been a decline in the sales of both industrial land and buildings through the later half of 2008. Developers and owner occupiers met restrictions in funding projects and business investments and on the back of this, average land values in the South-East corridor have declined. Though there has been caution amongst speculative developers given fluctuating building costs and the tight availability of debt, there is still a large amount of development either under construction or in the pipeline within the Yatala Enterprise Area. While many South-East Queensland industrial precincts may suffer from a lack of availability in the coming year, Yatala will continue to offer tenants and owner-occupiers a range of quality options in a strategic location. In 2009 the South-East corridor will be influenced by declining interest rates and stabilizing capital values and rent rates. We expect there will be some good opportunities in the coming year with land sales slow, developers and owner-occupiers will obtain land sites at discount rates, cashed up investors will find quality properties showing positive returns, and tenants on the move will locate a range of high quality new facilities in the first half of 2009.
State of the Art Development: Insight Logistics Park Yatala Brand new premises in Yatala & Stapylton have attracted rents between $115 - $130sqm net + GST as companies continue to locate to this major distribution corridor. Wright Property Director Aaron Dahl has leased 11,500sqm for Insight Logistics Group at their new state of the art development at Quarry Road, Stapylton. The premises has been leased by a major Australian company for a long term warehousing requirement. Insight Logistics Group have set a new benchmark for Queensland warehousing by maximising the volumetric storage capacity with a unique design. This inculdes 68 metre clearspan with support columns located on the exterior of the walls creating an additional 14% floor space, 10m minimum height at the lowest point of the interior roof providing an additional 20% volume capacity
For further opportunities at Insight Logistics Park in Yatala to maximise your company’s storage and efficiency please contact Aaron Dahl, Scott Dalton or Paul Dugan.
than standard warehouses, drive through vehicle access, post tensioned concrete hardstand, large all weather awnings and an ESFR Sprinkler system.
Western Corridor Update Wacol, Darra, Richlands, Sumner, Seventeen Mile Rocks, Carole Park, Heathwood, Redbank, Ipswich, Springfield and Raceview Transaction activity in the Western Corridor, from mid 2008, has been dominated by leasing. A lack of supply of vacant properties combined with the tight availability of funds resulted in many of the would-be owner occupiers resorting to leasing rather than sale opportunities. Leasing rates remain stable: B GRADE STOCK Strata units up to 600sqm Freestanding 500-1,000sqm 1,000-2,0000sqm 2,000sqm & above
$115-120psqm $110-120psqm $100-110psqm $95-105psqm
• Stockland have also contracted 514 Boundary Road, Richlands to a Brisbane private investor & 72 Formation St, Wacol to a syndicate group
Very few spec buildings are being built in the area due to economic risk, construction costs and tighter lending restrictions resulting in a high take up of existing buildings. Some notable lease transactions negotiated by Wright Property in the second half of 2008 include: • 108 Stradbroke Street, Heathwood $167,090pa (1,519sqm new building)
• Building B1, 10-12 Commercial Drive, Springfield $180,000pa leased to Lollipops Indoor Child Play Centre (800sqm building)
• 700 Boundary Road, Richlands $750,000pa (6,612sqm building) • Bognude Street, Bundamba $472,000pa (4,500sqm building)
A list of sales transactions that occurred within the western corridor during the third & fourth quarter of 2008: • 18 Sinnamon Road, Seventeen Mile Rocks sold for $750,000 to an owner occupier (565sqm building on 1,050sqm site) • 528 Seventeen Mile Rocks Road, Seventeen Mile Rocks sold for $2,250,000 to a Brisbane based investor (2,012sqm building on 4,047sqm site)
• 100 Cobalt Street, Carole Park $97,000pa (800sqm building)
• 2/1425 Boundary Road, Wacol $300,000pa (2,500sqm building)
The credit squeeze has caused some institutional property owners to sell some of their smaller assets to free up funding for their other developments. This in turn, has created opportunities for cashed up private investors, with immediate access to money, to take advantage of softening yields, lower interest rates and availability of A grade assets. Yields for these A Grade assets have been achieving between 8-9%.
• Colonial First State sold 616 Boundary Road, Richlands to an owner occupier for $15,000,000 mid 2008
$120-130psqm $115-125psqm $110-120psqm $110-115psqm
• Building C1, 10-12 Commercial Drive, Springfield $160,000pa leased to Tradelink (903sqm building)
Despite the global economic turmoil impacting the market early in the third quarter of 2008, resulting in a decline of owner occupier sales, demand for institutional grade properties from cashed up private investors has been strong.
• ING sold 36 Fulcrum Street, Richlands to a Brisbane based private investor for $12,500,000 late 2008
A GRADE STOCK Strata units up to 600sqm Freestanding 500-1,000sqm 1,000-2,0000sqm 2,000sqm & above
• Unit 2/99 Radius Drive, Larapinta $344,410pa (3,131sqm building)
• 200 Cobalt Street, Carole Park sold for $1,950,000 to an owner occupier (1,100sqm building on 4,453sqm of land) • 39 Fulcrum Street, Richlands sold for $1,960,000 to an owner occupier (1,280sqm building on 3,110sqm site) • 739 Boundary Road Richlands sold for $6,100,000 to an owner occupier (3,580sqm building on 6,645sqm of land) • 601 Boundary Road, Darra sold for $3,300,000 to an owner occupier (1,320sqm building 5,551sqm of land) • 620 Boundary Road, Richlands sold for $1,400,000 to an owner occupier (1,056sqm building on 2,575sqm land) • 68 Industrial Avenue, Wacol sold for $1,381,105 to an investor (500sqm building on 6,296sqm land)
Industrial Property | Commercial Property | Property Management
12 > 13
Industrial Unit Developments Western Corridor Reviewed 2008 to 2009 Wacol, Darra, Richlands, Sumner, Seventeen Mile Rocks, Carole Park, Heathwood, Redbank, Ipswich, Springfield and Raceview Over the past 5 years, the industrial property market has seen a record amount of supply of new industrial unit construction. In 2008 an array of new industrial units were completed and presented to the market. Previous limited stock was replaced by a slight over supply by developers keen to take advantage of higher rental rates and the prior lack of quality supply. Inside the Western Corridor a large amount of new unit developments have been completed with generally a very high standard of finish and have been accepted well into the marketplace. Long term tenants, due to an increase in rents, who previously have not owned industrial property, have moved into the purchasing market. Unit developments are ideally suited to these first time owner occupiers and in the inner Western Corridor we have seen a large number of strong sales recorded. The new retail bulky goods centre in Springfield recorded leasing rates between $180 and $240psqm. A new development underway in Raceview has already achieved pre-sales of between $1,650 and $2,000psqm and leases between $115 and $130psqm. Existing stock in the suburb has been leased for rates between $100 to $115psqm. In 2009 we anticipate investors, both seasoned and new, to take advantage of record low interest rates and high returns, particularly in the unit market. Now there is a rare opportunity for positive returns achieved with good quality assets. In fact, the opportunity today’s current climate presents is something we have not seen before. However, the year ahead will see a number of unit vacancies remain on the market. With current global financial issues, banks willingness to lend, and a slight over supply of current stock, competition will exist to attract market interest. Good quality, well located and well priced stock will be taken up with both buyers and tenants.
For further information on unit sales and leasing in the Western Corridor, contact Shaw Harrison 0488 999 889.
Management Key Issues: Building Legislation & Compliance With our ever changing times and legislation being at its most challenging it is important for property owners and property managers alike to know the ins and outs of the legislation when it comes to building responsibilities and duty of care for the owner and the tenant. It has become paramount to ensure that each and every building meets safety, fire, environmental, energy, and insurance issues. Building fire safety has become an important concern in Queensland recently with legislation focusing on evacuation plans & procedures, fire safety features and equipment (standard operation and safety levels), assessment and inspection of special fire services and engineering design briefs. The key element is that responsibility lies with both the owner and the tenant subject to the lease arrangements, tenants business and type of building construction. Have you thought about the basic property requirements? Fire extinguishers, exit lighting, sprinkler systems, alarm systems, evacuation procedures, hydrants and the required legislated service and testing requirements. Legally there is a duty of care to ensure that your tenants are adequately protected. Regular building inspections are an integral part of owning a tenantable asset. It is important to have annual checks/audits done on your building to ensure that you are complying with legislative requirements for workplace health and safety, building regulations, asbestos, termites, risk management, trade waste (water-borne waste from a business or manufacturing premises, other than: waste that is a prohibited substance, domestic sewage and storm water), land contamination and the likes. The above issues are important from many aspects but also more importantly from an insurance perspective. Annual audits of your building are essential to ensure that you have the right level of cover. e.g. what is the tenant responsible for under the lease and what are you responsible for as the owner? It is important for your property manager to be aware of these and any other issues and to monitor for both the owner and the tenant. Should the tenant not be compliant, would the onus be on the owner in the event of a claim? Consult your professional and experienced Wright Property Managers for further information and directions with regards to the above and any other queries.
Loretta Morgan Property Manager
Daniel Shafferman Asset Manager
Wright Property Management
What does this mean for your tenants?
2009
Property Maintenance:
An ongoing, monitored approach to property maintenance, upgrades and redecoration.
Wright Property Management has firmly established itself as one of the industry leaders in commercial and industrial asset management. 2008 saw a new team and a shift in focus away from traditional property management to an all encompassing asset management strategy.
Up to date property expense budgeting allowing for minimal reconciliation at the end of the financial year.
What does this mean for our owners?
Emergency Repairs:
Profit maximisation: assessing your property and setting strategies to extract the most return for the least expense.
Cash Flow Management:
Project Management:
Planning and management of tenant instigated projects. Maintaining fast response system which minimizes the operational impact of any non functioning property services.
Tenant continuity:
Landmark Sale - $26.5 million
Risk analysis and management:
Aaron Dahl, Director of Wright Property recently sold a 14ha tenanted industrial business park for $26.5 million. In the process, Wright Property Management gained one of the largest industrial facilities in Yatala.
maintaining constant contact with tenants in order to best plan for change (exits, fit out upgrades, space too small, space too large) combined with close contact with the sales and leasing team in order to minimize the amount of time properties remain empty between tenants. Defining potential problems and creating strategies to rectify, minimize or negate the impact.
Cash Flow Management:
accurate and in depth forecasting of costs involved in the day to day running as well as the long term maintenance and upgrading of properties under management.
..
r writes:
maintaining, upgrading or rty can be a good decision. with good facilities will add tracting and retaining
ways to maintain yields on investors are coming to f refurbishment projects. in giving buildings and rk with you to determine if
OFFICE FITOUT & REFURBISHMENT DESIGN & CONSTRUCTION. COMMERCIAL BUILDING MAINTENANCE.
25
1983 – 2008
YEARS
onstruct company with 25 fitout, refurbishment and perties. Our people are y size construction project
Maintaining Demand Who I am Michael
Wright Property Secures Management
The property in Yatala has 12 tenants and 15 buildings - DA is in place for at least 4 new buildings with the potential to increase the properties income with good management. Wright Property Management is focused on industrial and commercial property, including single business units, stand alone buildings, big sheds and warehouses, storage facilities, office showrooms and business parks. Contact the Wright Property Management Team on 07 3852 2280 to discuss your management needs.
What You Get If you are thinking about refurbishing or upgrading a property we can assess the site and provide concept designs demonstrating the projects potential with no commitment from the owner, agent or tenant. We will also give you an indicative budget that is a basic estimate of the associated costs to complete the project. At this early stage we investigate all legislative requirements such as town planning and classification of use to ensure the property is fit for the occupants use. Find Out More
I started with Priority in 2002 as an Estimator. I have now Below are two warehouse conversions we have completed in fringe progressed into a project management role and have been areas, but this is not all we do. To find out more about how we can assigned to work with Wrightwrites: Property. Roubin, Project Manager help you, visit us on the web at priority.net.au
In the current My economic maintaining, upgrading or attention toclimate detail, thorough approach and extensive shing or upgrading a knowledge allows me to can deliver allaprojects on time andAon refurbishing a commercial property be good decision. and provide concept budget. A keen surfer, you will often find me checking out properly cts potential with no maintained building with good facilities will add value to the best surf spot on the coast. the investment ent or tenant. We will also whilst attracting and retaining quality tenants. at is a basic estimate of the Find out more owners areare looking to maintain yields on project. AtProperty this early stage Below a few offor the ways major warehouse conversions we more than ever investors are to out us more to quirements investments such as town andhave completed, but this is not all wecoming do. To find e to ensure investigate the property the is about feasibility of can refurbishment how we help you, visitprojects. us on theOur web Project at priority.net.au Managers specialise in giving buildings and facilities a makeover and can work with you to determine if a project is practical. What We Do We are a full-service Design & Construct company with 25 years experience specialising in fitout, refurbishment and maintenance for commercial properties. Our people are experienced and can manage any size construction project for you. South Brisbane Warehouse Conversion
Newstead Warehouse Conversion
Nundah Warehouse Conversion
Spring Hill Warehouse Conversion
Newstead Warehouse Conversion
Industrial Property | Commercial Property | Property Management
14 > 15
However, beware of contracts which involve rebates or purchase price reductions, or a purchase price which is substantially lower than the market value of the property. In these circumstances, an administrator can rescind a contract on the grounds that it is not in the best interest of the company to sell the property at the price contracted for. After a contract is rescinded the contract is treated as if it never existed – while a purchaser will get its deposit back, it has no entitlement to seek damages against the seller for failing to complete the contract. If you would like more information on these topics please contact us.
Take note: Landlords may soon be able to recover Land Tax from Lessees: Landlords may soon be able to recover land tax as a lease outgoing if the new proposed draft Land Tax and Taxation Administration Amendment Bill 2009 (Bill) is put to, and passed by, the Queensland Legislative assembly. At this stage, the Bill has only been released in draft format for public comment. If eventually passed, landlords of commercial and industrial premises will be able to include land tax as a lease outgoing and require tenants to reimburse them for this cost.
Landlords and Purchasers (how to protect yourself in a tightening market)
Landlords and Purchasers
The number of companies which have entered into external administration (either voluntarily or involuntarily) has increased by approximately 60% from this time last year. Andrew Johnson
Landlords of retail or residential premises caught by the Residential Tenancies Act 1994 orItthe Retailimportant Shop Leases Act amount of the bank guarantee. is also to remember that, in addition to arrears, landlords may also incur associated 1994 will remain unable to directly recover land tax under the enforcement costs such as legal costs, and costs associated with lease.
This statistic has had significant ramifications for landlords Partner and purchaser of land, who have failed to take steps to protect T: +61 (0)7in3135 0615 and unpredictable market. themselves a tightening
IfIsthe Billseller is passed, the new rules will only apply to leases you solvent? entered into after 30 June 2009.
(how to protect yourself in a tightening market)
The number of companies which have entered into external E: andrew.johnson@holdingredlich.com.au
Importantly: administration (either voluntarily or involuntarily) has increased
by approximately this time last year.that they have 1. Landlords should 60% takefrom steps to ensure sufficient security in the event ramifications that their lessee goes and into This statistic has had significant for landlords liquidation; andof land, who have failed to take steps to protect purchasers themselves in a tightening andthat unpredictable 2. Purchasers should make sure their sellermarket. is solvent when purchasing property. Importantly: Lessees Liquidation 1. inLandlords should take steps to ensure that they
haveface sufficient security in seeking the eventto that their lessee goes Landlords may a long wait in recover rent arrears into liquidation; and and other moneys from a lessee in liquidation. Assuming the lessee has sufficient assets, landlords must then join the queue 2. Purchasers should make sure that their seller is solvent with other unsecured creditors who are equally entitled to receive when purchasing property. dollar for dollar until the funds run dry. Lessees in Liquidation
Landlords can jump the queue by securing their potential liability Landlords mayguarantee, face a longprovided wait in seeking recover with a binding bank that it to meets therent following arrears and other moneys from a lessee in liquidation. requirements:
Assuming that the lessee has sufficient assets, landlords must
1. Notthen have anthe expiry date; join queue with other unsecured creditors who are
to receive dollar for dollar untilathe funds run dry. 2. Be equally issued entitled from a reputable financier, and not second rateLandlords or unknown lender. can jump the queue by securing their potential liability with a binding bank provided that it meets 3. Guarantee performance of allguarantee, of the lessee’s obligations the following requirements: under the lease, not just payment of rent; Not have expiry date;and 4. Be 1. unconditional andanirrevocable; 5.
Be issued from is a reputable financier, and not aofsecond Be 2. for an amount which equivalent to a minimum three rateand or unknown lender; months rent outgoings, and increased depending on the3.type of Guarantee lessee. It performance doesn’t endofwith it a condition all ofmaking the lessee’s of your lease. obligations under the lease, not just payment of rent;
Don’t leave it too late to exercise your rights 4. Be unconditional and irrevocable; andunder the lease and call up your bank guarantee. Landlords should never allow 5. Be for an amount which is equivalent to a minimum of lessees to get so far behind in rent that their debt exceeds the
three months rent and outgoings, and increased depending on the type of lessee. It doesn’t end with making it a condition of your lease.
reinstating the premises.
Purchasers find themselves a grey where a seller Don’t leave it may too late to exercise your in rights underarea the lease becomes signing Landlords a contractshould but before and call upinsolvent your bankafter guarantee. never completion. allow lessees to get so far behind in rent that their debt exceeds the For purchasers who are happy to take their deposit and run, amount of the bank is also important to remember the situation is notguarantee. so grim. It All standard REIQ contracts allow that, in addition to arrears, landlords may also incur purchasers to immediately terminate a contractassociated and recover the enforcement such as legal costs, and costsBut associated deposit uponcosts the seller becoming insolvent. what if the deposit with reinstating the premises. had been immediately released to the seller and is not held by a deposit holdersolvent? or stakeholder? Is your seller
Purchasers may findclaim themselves in athe greyinsolvent area where a is always an While a damages against seller seller insolvent after themselves signing a contract optionbecomes purchasers will find stuckbut in before a queue, behind completion. financiers, secured creditors and equal with other unsecured parties. For purchasers who aresecure happy your to takeinterest their deposit run, This will To jump this queue, with aand caveat. the situation so grim. All standard REIQ mean that is thenotseller cannot transfer thecontracts propertyallow without your purchasers to immediately terminate a contract and recoverback before consent, and you are entitled to receive your deposit the upon the deposit property canthe beseller sold.becoming insolvent. But what if the deposit had been immediately released to the seller and is not Unless there is evidence that the completion of the contract is held by a deposit holder or stakeholder? not in the best interest of the company, the external administrator
While damages claim againstthe thecontract. insolvent seller is always shoulda eventually complete an option, purchasers will find themselves stuck in the queue, However, bewaresecured of contracts which involve behind financiers, creditors and equal withrebates other or purchase price reductions, or a purchase price which is substantially lower unsecured parties.
than the market value of the property. In these circumstances, an
To jump this queue, secure your interest with a caveat. Thisthat it is not administrator can rescind a contract on the grounds will mean that the seller cannot transfer the property without in the best interest of the company to sell the property at the price your consent,for. andAfter you aarecontract entitled is to rescinded receive your deposit backis treated contracted the contract before the property can be sold. as if it never existed - while a purchaser will get its deposit back, it has no there entitlement to seek against thecontract seller for failing to Unless is evidence that damages the completion of the complete contract. is not in thethe best interest of the company, the external administrator should eventually complete the contract. If you would like more information on these topics please contact us. Andrew Johnson - Partner T +61 (0)7 3135 0615 E andrew.johnson@holdingredlich.com.au
Identifying untapped income streams from property investments In a period of tightening cash-flow, there are old and new ways of ensuring your property investment is providing the best cash return, without increasing the rent or reducing the outgoings. Capital Allowances (purchased properties) Capital allowances are available for any income producing property, new or old. Properties essentially contain 3 components – land, depreciating assets (plant) and capital works (building). If you have purchased a property there are significant allowances available which will reduce your income tax payable and increase your aftertax return and cash flow. The following examples are based on recent sales and demonstrate the types of deductions available:
Property Type
Purchase Price
1st Yr Deduction Total Deduction
Industrial
$3,000,000
$80,000
$1,750,000
Commercial
$5,000,000
$150,000
$2,800,000
Retail
$15,000,000
$285,000
$6,800,000
Investment Allowance The Federal Government announced an additional tax deduction on the 12 December 2008 in the form of a 10% Temporary Investment Allowance. The allowance is available to businesses that acquire or commence construction of a new asset between 13 December 2008 and 30 June 2009 with the asset being ready for use by 30 June 2010. The taxpayer will be able to claim an additional tax deduction of 10% on the asset if it has a cost of over $10,000.
Property Tax Profiling ™ As an extension to the Capital Allowances previously outlined, many of our astute clients engage us to review their property portfolio on an annual basis to identify additional deductions and allowances. These allowances and accelerated deductions relate to all capital expenditure, repairs, tenancy fitouts and contributions, write-offs of the un-deducted value of demolished items, write-off and future deductions from inherited fitouts, analysis of refurbishments and re-assessment of effective lives. This unique service ensures our clients are minimising their tax payable and provides a clean and manageable register of assets. Make Good Contributions One of the most overlooked areas of leases occurs when tenants vacate the property. Most leases contain expressed or implied clauses relating to R&M, make good on expiry and redecoration but in many cases the tenant pays insufficient contributions to return the property in a condition as agreed in the Lease. We regularly find that the cost to make good a commercial office space is between $100 $150/m2 (equivalent to 4 to 6 months rent). Single tenant properties, including industrial buildings, often result in a higher claim. Desktop Review Napier & Blakeley have been providing these services for 25 years and have asset and cost information on over 10,000 properties in Queensland. Our initial consultation including a Capital Allowances Estimate or Make Good Assessment is available on a complimentary basis. For more information contact Shaun Kenafake, Director on (07) 3221 8255 or skenafake@napierblakeley.com
land cost to development equation is still a major issue and is further compounded by the outlook for minimal rental growth and softening of yields.
John McEvoy (Brisbane) John Muchall (Gold Coast) David Lovell (Sunshine Coast)
07 3226 0000 07 5510 3100 07 5443 7977
The industrial markets across South East Queensland have entered a period of uncertainty. Rental growth throughout last year slowed significantly from the double digit levels of growth recorded in 2006 and 2007. According to Access Economics, the key economic drivers for industrial growth in Queensland are expected to soften substantially during 2009 and 2010 and are forecast by LandMark White to bring an end to strong rental growth in the short to medium term. Improvement in growth levels is forecast to occur after 2010 as economic fundamentals are forecast to improve and confidence to return to the market. Land values continued to decline from early in 2008 to average $415sqm. The current range of land values is between $220sqm and $550sqm with average land values declining by over 10% in the last 12 months. With considerable growth in land values occurring between 2004 and 2007, the issue of affordability and the cost of land for future developments have become more apparent. The
Going forward all eyes are focused on what 2009 will bring, whilst opinions are somewhat divided one thing learnt from 2008 is that anything seems possible. Factors that will strongly weigh on the economy in 2009 include the banking industry’s ability and willingness to lend; unemployment levels; the ability of individuals and business to service their debt; and business confidence. On the positive side of the ledger is the government’s willingness to provide stimulus to the economy via spending which is aimed at creating jobs, supporting retail spending and most importantly, boosting confidence. Further, Australian interest rates remain at a significant premium to other economies around the world, the RBA’s reduction of these rates will have the potential to somewhat cushion the economic fall. In all likelihood 2009 will see a further consolidation of business functions with activity to remain at subdued levels similar to that witnessed in 2008. Part of our focus at LandMark White has been client service and we are committed to provide a quick response to your valuation and advisory needs. If you require any further information on the Brisbane or Gold Coast Industrial markets or have any valuation queries please contact our Managing QLD State Director, John McEvoy, john.mcevoy@lmw.com.au, Gold Coast Director, John Muchall, john.muchall@lmw.com.au or our Sunshine Coast Director, David Lovell, david.lovell@lmw.com.au.
Industrial Property | Commercial Property | Property Management
The Wright Advisor
Industrial Property Commercial Property Property Management
A message from Glen Wright
Well, it was a relief to see the end of 2008, a year which started out strongly but ended the exact opposite. Like a lot of businesses, we found 2007-2008 was the best year on record. We celebrated over $100 million in settlements over the month of February alone, but by the end of calendar 2008 the financial and property markets had undergone a complete reversal. Certainly 2008/2009 and 2009/2010 will be slower years, but we believe there will be some good business to be done as the wealthy private investors, solid owner occupiers and DIY super funds take advantage of good value deals. Certainly, this will be the time to buy property that rarely comes to the market and to be able to buy at very attractive yields. This slowdown is markedly different from that of 1991-1993. This time, we have low interest rates, a strong local economy, massive infrastructure spending and continued population growth in the south east corner. The $4 billion “Rudd Bank” commercial property contingency fund announced in January will arrest any shortfall in funds if foreign banks withdraw from Australia in the next two years. “While this will not be a get out of jail free card for developers whose project financing is unsound, it will provide stability and security for those in the property business who have relied on syndicated loans to float large projects. While we think 2009-2010 will be slower years, this is a prime time for those with cash or the ability to borrow at what will be record low interest rates to pick off quality property at value prices.
Polo News
The Wright Property Polo Team won two major championships in 2008.
Please contact Glen Wright should you wish to get involved with Polo - glen@wrightproperty.com.au
The most prestigious polo award on the Queensland Calendar, the Mercedes Benz Cup, was won by the Wright Property team. In front of 5,000 people at Neil and Trish Ford’s Alsace, the team played well in the 10 goal competition to win a well contested final and take out the trophy. During the year, Wright Property also won the City Motor Auction 6 Goal competition making 2008 a very successful year for the team. Ashling Polo, proudly sponsored by Wright Property, ran a very successful corporate training day at the Ashling Polo fields at Beaudesert. Ten participants spent the day learning all aspects of the game and had an introduction to horse riding and the excitement of playing polo. 30/1/09
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Building 6a, Technology Office Park 107 Miles Platting Rd, Eight Mile Plains Q 4113
All Correspondence to PO Box 3061 Newstead Q 4006
Please register on our website www.wrightproperty.com.au to receive future newsletters and regular updates on properties and market trends. IMPORTANT: Material contained in this publication has been prepared in good faith and with due care by Wright Property and its advisors solely for the information of readers and does not constitute professional advice. Readers should not act solely on the basis of material contained in this publication but should make independent investigations to satisfy themselves as to the correctness of any declaration or representations. The Wright Advisor is issued as a helpful guide to readers for their private information.