Month-In-Review-March-2015

Month in Review
March 2015
range of $2,000 to $3,500 in older buildings and up
to $3,800 per square metre in newer buildings.
Outside of The Signature Building, demand for strata
office space is predominantly from owner occupiers.
Investors are present however require good lease
terms and quality tenants.
Medical and allied health space has seen quite a
lot of activity over the past 12 months due to the
construction and recent completion of the new
St Stephens Hospital. The recent completion of
one strata complex has seen rates in the order of
$3,500 per square metre achieved and purchased by
predominantly owner-occupiers. Another project has
recently commenced marketing.
Leasing rates are likely to remain very competitive
with landlords trying to attract tenants. Incentives
are common and tenants remain cautious with most
local operators negotiating initial one year lease
terms with options.
Gladstone
In early 2015 we consider market conditions to
be volatile for all Gladstone market sectors with
potential for further price vulnerability. The
Liquefied Natural Gas (LNG) industry and more
specifically the construction phase of the LNG
consortiums building multi billion dollar gas plants on
Curtis Island are now winding down and commenced
the production and export phase in late 2014. The
total workforce in Gladstone will be reduced from
peak levels and this will have a direct flow on effect
to the residential and commercial property markets
in terms of rental values, vacancies, sales volumes
and prices.
Sales volumes are expected to remain weak which is
in line with previous years.
Office rental levels have contracted on the back
of rising vacancies. Vacancies are expected to rise
slightly in 2015 and leasing up periods may also
increase depending on how eager landlords are to
meet market rental levels.
Rockhampton
The year ahead for the office market in Rockhampton
is set to continue at the pace of the previous twelve
to eighteen months. With a further interest rate cut
kicking off 2015, it is likely that owner occupiers
will continue to dominate the market for office
accommodation. These buyers are taking advantage
of the low interest rates to secure a premises of their
own, with most recent sales up to about the $1 million
price point. Most of the activity by this group is likely
to be sub $750,000.
A result of government rationalisation of
accommodation, coupled with economic conditions
and an oversupply of office accommodation has
resulted in several vacancies within the CBD,
including secondary accommodation, as well as
modern newly refurbished and newly developed
accommodation. As a result there are longer letting
up periods for vacant tenancies and it is becoming
common for incentives to be included in lease
negotiations, including rent free periods and fit out
contributions.
It is likely that there will continue to be good
opportunities in the market for owner occupiers
given vacant stock on the market, yet few good
quality investment opportunities. Where investment
opportunities do exist, investors are likely to
demand returns between 9% to 9.5% for better
quality properties and 9.5% to 10% for secondary
properties. They will be sensitive to WALE and tenant
strength.
Mackay
The office market in Mackay has had it tough since
late 2012 due to an increase in supply, coupled with
decreasing demand, which has resulted in a high
volume of vacant space being available moving into
2015.
In late 2014, we saw a number of new leases
negotiated, which indicated that rental rates have
also begun to soften in response to the continuing
oversupply that the market is facing. In saying this,
there is only limited evidence of a decline in rental
Commercial
14