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Commercial Property
SPECIAL REPORT
Photo: Stockphoto
businessnews.com.au
Commercial Property
F E AT U R E Long-term focus drives
Perth may have the highest office
building vacancy rate nationally,
but that’s done little to dampen the
confidence of investors, developers
and real estate agents.
highlighted a part of business
life often taken for granted: a
physical presence.
Workplace culture is a major
part of that, according to Redhill
Partners partner Oliver Mahé.
“We believe the office of the
future has to become a desti-
nation with a purpose and will
be designed with an increased
Katie McDonald focus on collaboration, with
katie.mcdonald@businessnews.com.au
potentially more individu-
8-PAGE FEATURE al-style work completed from
home,” Mr Mahé told Business
P
ERTH’S latest lock- News.
down provided a stark “The office of the future will
reminder to employers form an important part of an
and office landlords of the organisation, as it will be the
changing nature of work, where physical manifestation of the
staff have the ability to operate company’s culture.
remotely at short notice. “Rather than simply clocking CIRCUMSTANCE: One fifth of Perth CBD office stock is now considered vacant.
But the shift to working from in and out, we believe it will
home comes with caveats. become the place of employee
Some people find it diffi- creativity and engagement.” last year, but that office leas-
ing activity had picked up again,
cult to remain motivated and Mr Mahé’s confidence in the The fact remains that offices and with Redhill Partners com-
productive in a home environ- longevity of the office is backed
ment, while others can’t juggle by Redhill Partners’ recent $67.8 the CBD will always remain the lifeblood pleting 5,000 square metres of
work and family needs (such as million play for a CBD office, office leasing deals in the last
children home from school in pushing the Singapore-based
of our city centres, and drivers of quarter of 2020.
“We are of the opinion
lockdown). private investment company up productivity and innovation that while the pendulum has
Many workers find the lack the ranks on the Business News
of socialisation a major draw- Data & Insights list of commer- - Sandra Brewer swung to a desire to work
back of WFH, with this lack of cial property owners, to make from home, it will swing back
interaction potentially affect- the top 10 (see page 34). Another selling point was clean slate to get a first-mover in the medium term as all the
ing staff morale. Redhill Partners’ recent the notion that Perth was at advantage in delivering a whole intangible benefits of having
From an employers’ perspec- purchase, 899-927 Hay Street, the beginning of a rising com- building offering and office the employees together in one
tive, the inability to monitor comprises a vacant 14-level modities cycle, which Mr Mahé fitout to the changing tenant place begins to become more
staff is a frustration, despite office tower (previously known expected to increase local eco- requirements due to COVID-19. apparent,” he said.
several studies showing an as Dynons Plaza and the former nomic activity and demand for “We believe that once the
increase in worker productivity headquarters of Chevron), as A-grade offices. pandemic is contained and Leasing activity
in some sectors. well as three heritage buildings. “We were [also] attracted to behind us, we will see compa- Perth businesses appear to
The property industry is Vendor Stamford Hotels and the opportunity due to the nies begin to return to the office understand the benefits of
banking on the downsides of Resorts rejected a $134 million significant discount to replace- and embrace a cultural change, being back in the office more
remote working to overshadow offer for the property just over ment cost for a 10-year-old look for new features in office than most, with the CBD’s occu-
the upsides in the long run. a decade ago. building, the location, and the buildings, and have refined pancy rate (the percentage of
While the pandemic has Mr Mahé said buying at a fact that it is one of the largest requirements for their office staff working from the office as
shown the office is part of cyclical low point in the Perth contiguous vacant spaces in the fitouts.” opposed to at home) at the end
an asset class that’s certainly office market was one of the market,” he said. Mr Mahé said there had been of last year the highest of all
not immune to the whims of factors underpinning the “Additionally, we liked that some initial decision paralysis major Australian capital cities
economic events, it has also group’s latest acquisition. we were presented with a among prospective tenants (see graph).
30 | February 15, 2021
FEATURE
office outlook
Property Council of Australia CBD occupancy rates, all major Australian cities size requirements, speculative
WA executive director Sandra fitouts, incentives, and a flight
Brewer said office market to quality were ongoing influ-
demand had been an ongoing ences on office demand in the
challenge for Perth, with the Perth market.
CBD having averaged a vacancy Centralisation, where firms
rate of 19.7 per cent since Janu- take advantage of CBD condi-
ary 2016. tions and relocate from the city
“We know that COVID-19 fringes, was another recurring
will have impacts on the way theme, he said.
we work, especially when out- “If you want to attract staff
breaks occur, but the pandemic back to the office, it has to be an
won’t last forever,” Ms Brewer environment that’s attractive,”
told Business News. Mr Postma told Business News.
“Business and government “Everyone’s hopeful the
have a critical role to play in [latest] lockdown will only be a
supporting the return to office short-term blip.”
workplaces and helping more Source: JLL Research/PCA Mr Postma said enquiries and
people come back to office inspections throughout Janu-
precincts. vacancy at 2 per cent is a good “I think all of us were brac- ary had been promising, driven
“The fact remains that offices sign, especially when you look ing ourselves as COVID hit largely by businesses operating
and the CBD will always remain at what’s happening across the that we’d be in all sorts of trou- in the resources sector.
the lifeblood of our city centres, Sydney and Melbourne markets ble, especially when the office Government workspace
and drivers of productivity and where sublease vacancy has vacancy rate is in double digits. requirements also have the
innovation.” more than doubled. “With shorter leases and potential to make big move-
One fifth of Perth CBD office “Our subleasing activity is smaller spaces … maybe that’s ments in the market, with
stock is now considered vacant, ridiculously low when you con- why our end of the market is Sheffield Property last week
with buildings deemed to be of sider what we’ve gone through happening.” securing 8,000sqm of A-grade
B-grade quality reporting the in 2020, and reports that a lot Mr Hay said he had bro- office space for the Department
highest vacancy (28.8 per cent), of people working from home kered several recent deals in of Communities at 130 Stirling
followed by C-grade (21.6 per cent). won’t want to come back to the East Perth and Northbridge, Street.
Photo: Gabriel Oliveira Meanwhile, the office office; if that was the case, you including three-year terms for And earlier this year, the state
vacancy rate in West Perth would see sublease vacancy sig- a digital marketing firm and a government revealed plans for
has remained unchanged since nificantly going up.” dance studio, as well as a one- a new office building in West
Early data for January 2021 July 2020, sitting at 22.1 per cent, Tenants requesting short- year term for a migration firm. Perth to accommodate parlia-
from the Property Council the precinct’s highest level of er-term leases and smaller He said a number of tenants mentary staff (see map).
of Australia suggests Perth’s vacancy on record. floorplates was an emerging approaching the end of their “There’s a couple of big
level of office occupancy has However, there was some trend, Mr Bhimjiani said. lease were requesting less enquiries still floating around
remained high despite the positive news for Perth’s office A recent survey conducted by space, rather than abandoning with Bankwest, Santos and the
recent lockdown, sitting at leasing sector, according to JLL real estate firm Knight Frank the office altogether. like that have the potential to
66 per cent. Melbourne and manager WA research Ronak revealed 40 per cent of partic- “They may have had a 700sqm kick off a new development,”
Sydney reported the lowest Bhimjiani. ipants chose “we will require floorplate before, their lease has Mr Postma said.
occupancy rates in the coun- While headcount reductions less space” when asked what come up and now they’re saying, “We could possibly see two
try (31 per cent and 45 per cent, and tenant downsizing had the likely impact of COVID-19 ‘We’ll go down to 300sqm, we’ll new towers started over the
respectively). translated into an increase in would be on their workplace. hot desk, some of our staff will course of this year when some
But office vacancies remain a subleasing activity across all “Previously, on average, ten- work from home’ … the business of the larger space users make
perennial issue for Perth. Australian CBD office markets ants were looking at eight-year world has changed,” Mr Hay said. decisions on what they’re going
The Property Council of Aus- in the fourth quarter of 2020, leases, now they’re increasingly That appetite for flexibility to do long term.
tralia’s Office Market Report, Mr Bhimjiani said the impact looking at three-year terms,” Mr and smaller space is highlighted “So that will be interesting to
released earlier this month, out- had been less severe in Perth. Bhimjiani said. by flexible workspace providers see if the stay-put option wins.”
lined that Perth and West Perth “Sublease vacancy provides “What they really want is Liberty and Spacecubed, which
had the worst vacancy rates of a unique insight into business adaptability, the ability to chop added more CBD space to their Developments
any city or city-fringe location sentiment and its implications and change their space.” portfolios in 2020. While there are several
in the country. on demand for office space,” he That sentiment is echoed by However, it’s also worth office projects planned for
In the six months to January said. Mark Hay Realty Group prin- noting WeWork shed 3,414sqm the CBD, only three are under
2021, the Perth CBD vacancy “Companies start subleasing cipal Mark Hay, who said the of space from its portfolio construction.
rate increased by 1.6 per cent space to other tenants because same trend was appearing at (shutting down its Northbridge AAIG’s Capital Square project
to 20 per cent, the advent of they just don’t need that space the small end of town. premises) during the same will add 25,200sqm of space to
COVID-19 unravelling some of anymore. “It’s quite encouraging, the period. the market, due for completion
the recovery that had started to “But the fact that we’ve been activity out there from a year Savills WA managing director
take place in recent years. able to hold on to sublease ago,” Mr Hay told Business News. Graham Postma said besides Continued on page 32
February 15, 2021 | 31
FEATURE COMMERCIAL PROPERTY
MAJOR OFFFICE DEVELOPMENTS UNDER WAY
8
Mill Green Complex
1 & 5 Mill Street
$1b
1 GDI Property Group
45,000sqm
New 33-storey tower at 1 Mill Street, upgrade of 5 Mill Street
Development application lodged
Brookfield Lots 5 & 6
Elizabeth Quay
$367m
2 Brookfield
52,000sqm
Two towers (21 and 58-storeys) comprising office, retail, hotel, apartments.
Development application approved
One The Esplanade
Elizabeth Quay
$360m
3 Brookfield
54,000sqm
29-storey office tower, new Chevron headquarters
Under construction
Esplanade Plaza
Above Perth Bus Port
$150m
4 Brookfield 9
24,000sqm
New office tower and redevelopment of bus port
Revised development application lodged
Capital Square
98 Mounts Bay Rd 5
$140m
5 AAIG
25,200sqm (Tower 2)
18-storey office tower and 32-storey mixed-use tower (hotel, dining)
Under construction
Hawaiian HQ
Mercantile Lane
$45m
6 Hawaiian
Two-storey 900sqm office, part of overall Parmelia Hilton rede-
velopment Map: Google Maps
Under construction
Westralia Tower
141 St Georges Terrace
Long-term business, it’s an attractor to
get new staff,” Hawaiian gen-
“I think the vacancy issue
is a function of the fact Perth
$40m
7 GDI Property focus drives eral manager office buildings got overbuilt in 2014, when all
Richard Kilbane told Business the buildings went up at King
9,100sqm
13-storey hybrid timber/steel office
office outlook News. Square … we’re still working our
Development application approved “It’s important for collabora- way through it, and what hap-
From page 31 tion and career development as pened last year has really just
ABN Group HQ well. If a grad is starting their set us back a few years.
Leederville Hotel car park site in the second half of this year, career, it’s very difficult to get “So, I can’t see speculative
$35m
8 FJM Property with BDO believed to be one of ahead if you’re sitting in your development happening, given
9,000sqm its future tenants. study at home and don’t have where the market is at.”
Five-storey mixed-use office building Also under construction is any interaction with the boss Brookfield is the most active
Under construction Chevron’s new headquarters at or your work colleagues. office developer in Perth.
One The Esplanade, Elizabeth “There’s also a lot of statistics Including One The Esplanade,
Parliamentary Precinct Project Quay, which is expected to be out there that people meet their the organisation has four office
1,3 & 5 Harvest Terrace, West Perth
$30m completed in 2023. partners through the office projects planned, among them
9 The state government and Pivot Group And Hawaiian is due to shift environment … so if you’re all lots five and six at Elizabeth
6,300sqm from its home at 235 St Georges working from home, all those Quay, which received develop-
Four-storey office to cater to parliamentary staff Terrace to a new purpose-built things will struggle.” ment approval last year.
Development application lodged
two-storey 900sqm office off Mr Kilbane said the office Brookfield regional director
Mercantile Lane in the coming market had been tough for a developments and property
Bishop's See North
78 Mounts Bay Road, Perth months, as part of the compa- number of years but remained Nick Ozich said the company
TBA ny’s $45 million redevelopment an important asset class within had also recently submitted
10 Brookfield of the Parmelia Hilton. Hawaiian’s portfolio. an amendment to its develop-
46,000sqm “We still see the office, and “When the office market ment application for Esplanade
New office tower within existing Bishop's See precinct
most of our tenants do as well, pops, it can be quite attractive Plaza, creating additional
Development application approved
as forming a key part of their in terms of its returns,” he said. office space, and that it had an
32 | February 15, 2021
COMMERCIAL PROPERTY FEATURE
“No-one really knows what the largest increase in office
the [COVID-19] vaccine is going vacancies, up 9.5 per cent to 20.6
to do. per cent as of January 2021.
“But the state’s got really Aberdeen in Scotland, and
strong fundamentals; it’s got a Houston in the US, both oil and
good solid base of resources and gas-focused economies, have
other forms of work. office vacancy rates above 25
“As long as they continue to per cent.
develop mines and re-invest “In the years ahead, post
into the office, the sector will COVID-19 changes to the econ-
be strong.” omy and the nature of work
will likely see Perth increase its
Global view reliance on the resources sector,
Compared to other resourc- particularly iron ore,” Mr Stone
es-driven cities around the said.
world, the Perth office market “The six largest resources
has been relatively steady over firms – BHP Billiton, Rio Tinto
the past five years. and FMG [iron ore], Chevron,
Independent property firm Woodside and Shell (oil and gas)
Y Research undertook an anal- – occupy just under 20 per cent
ysis of commodity office space of offices in the Perth CBD.
across 14 global resource hubs “Moves by these companies
in 2016 and again in 2021. will have a proportionally high
Perth emerged as one of the impact on future occupancy.”
Mur
ray few cities on the list to have
Stre
et actually recorded a decrease in Outlook
Hay vacancies in five years: down A rise in subleasing activity
Stre
et
from 22.1 per cent in 2016. and falling rents is likely to be
et
Y Research director Damian on the horizon for the Perth
Stre
Wel Stone said the strength of CBD, according to Colliers
rack
lingto
n St
t
WA’s iron ore sector, the emer- International associate director
10
tree
reet
Bar
6
1 gence of new growth sectors, research and urban economics
mS
7
ia
and a limited direct impact of Quyen Quach.
Will
COVID-19 had resulted in Perth Colliers research found that,
4 St G recording less market volatility by the end of December 2020,
2 eorge
s Te between 2016 and 2021. premium-grade office base
3 rrac
e
“Cities in North America and rents averaged $700/sqm, 1.4 per
the UK, which have experi- cent lower than the December
enced, according to local market quarter in 2019.
analysts, ‘a double black swan Average A-grade rents also
event’ of plummeting oil prices decreased during that period,
and widespread local COVID-19 falling 1.7 per cent.
infections, have seen vacancy “The full impact this pan-
existing development approval For any of its projects to pro- tower, which is likely to start rates [direct and sub-lease] rise demic has on office space
for stage two of the Bishop’s gress to construction, however, construction in 2021. dramatically in recent years,” demand may take more time
See precinct. Mr Ozich said tenant pre-com- On the CBD fringe, ABN Mr Stone told Business News. to flow through, [as] businesses
“At a general level, Brookfield mitments would need to be Group will soon move into its “Resources cities have largely continue to assess the longer-
is very positive of the long-term secured first. new 9,000sqm headquarters in recorded significantly higher term impact of COVID-19 on
fundamentals of the Perth “You’ve still got relatively Leederville. vacancies between 2016 and future trading conditions and
office market. We’re a strong low land costs in Perth, you’ve Another significant office 2021. office space requirements,” Mr
believer that there’ll be grad- got capital values holding for development planned for “Cities such as Houston, Aber- Quach said.
ual improvement through the well-located and leased assets, Perth’s suburbs is the second deen and Edmonton have seen “Colliers expects more sub-
market over time,” he said. stable construction costs, and stage of Primewest’s Prime their vacancy rate increase by lease space to come onto the
“Premium office space is tight record-low interest rates, so it is House in Joondalup. more than 7 per cent over this market over the next six
in Perth; if a tenant is seeking a good time to develop,” he said. Last June, Primewest frame. months as businesses continue
2,000sqm or more ... it would be Other significant develop- unveiled its $80 million plans “Capital cities such as Sin- to seek cost efficiencies.
difficult to secure now, so new ments in the CBD pipeline for a 12,000sqm office building. gapore and Oslo, which would “Following the insolvency
developments that are gener- include GDI Property’s $1 bil- A Primewest spokesperson typically have a more diverse trading moratorium, which
ally anchored at 75 per cent lion plan for the revamp of its told Business News talks were range of major occupiers, such ended on December 31 2020,
will offer additional space for Mill Street complex, the group under way with potential ten- as government and financial it is possible that there will
smaller tenants to move into a submitting a development ants but no commitments had services, have seen vacancy rate be increased incidences of
new facility.” application late last year. been made, and that a formal tighten to under 6 per cent.” business closures from unvi-
Mr Ozich said Brookfield was Those plans include a new start date wouldn’t be decided Brazil’s Sao Paulo, an iron ore able businesses, which could
actively promoting its planned 33-storey tower at 1 Mill Street, until there was a tenant city, recorded the largest fall contribute to an increase in
projects in the market and and an upgrade of the existing secured. in office vacancies over that vacancy.
remained tight-lipped about complex at 5 Mill Street. “The reality is, the office period, contracting from 23.6 “However, there is optimism
the identity of prospective GDI Property also recently market is no different to any per cent to 19 per cent. that WA’s recovering resources
tenants, with the group only received approval for a tim- other business, there’s going Meanwhile, Edmonton in sector and economy will limit
talking to existing established ber-steel hybrid office next to to be a bit of uncertainty for a Canada (predominantly centred potential increases in the year
tenants in Perth. its existing Westralia Square while,” Mr Kilbane said. around oil and gas), reported ahead.”
February 15, 2021 | 33
FEATURE COMMERCIAL PROPERTY
Data & Insights WA’s LARGEST COMMERCIAL PROPERTY OWNERS
Ranked by size of total area in m2 and then by total assets
Photo: Gabriel Oliveira
Change
from
previous Total lettable
Rank year Company name Senior executive and title area in m2 Properties owned
1 Forrest Place (6,543), 619 Murray St (3,950), Australia Place (15,626), IBM Centre 1060 Hay St (8,411), Joondalup
Mr John Bond
1 — Primewest Executive chair 194,548 House (4,352), 15 Ogilvie Road (3,828), 267 St Georges Terrace (3,506), 251 St Georges Terrace - 255 SGT (625), 251 St
Georges Terrace - 251 SGT (9,745), PW Osborne Park, 71 Walters Drive (3,815)...
Mr Nick Ozich 108 St Georges Terrace (38,396), Bishop's See 235 St Georges Terrace - 50% Brookfield, 50% Hawaiian (8,875 (Total:
2 — Brookfield Regional director, property & 177,744 17,750), Brookfield Place Tower 1 (85,762), Brookfield Place Tower 2 (33,349), EY Building (11,362)
developments
Mr Kevin George 240 St Georges Terrace (47,275), Kings Square Welling Street - Dexus 50%, Dexus Wholesale Property Fund 50%
3 — Dexus Executive general manager, 116,670 (52,316), Carillon Hay St Perth - Dexus Wholesale Property Fund (5,909), 58 Mounts Bay Road - Dexus Office Partnership
office 50%, Cape Bouvard Investments 50% (11,170 (total 22,341))
Mr Miles Rowe 225 St Georges Terrace (20,766), Bankwest Place (43,517), Optima Centre Osborne Park (16,116), 181 St Georges Terrace
4 — Charter Hall Regional portfolio manager, WA 116,188 (3,590), 303 Sevenoaks St Cannington (20,837), Eastpoint Plaza 233 Adelaide Terrace (11,362)
Mr Steven Gillard Mill Green Complex: 197 St Georges (26,336), 5 Mill St (7,148), 1 Mill St (6,648). Westralia Square (32,635), 1 Adelaide
5 — GDI Property Group Managing director 98,747 Terrace (19,967), 180 Hay Street (4,925), 251 Adelaide Terrace (1,088)
Mr John McBain 111 St Georges Terrace (18,896), Havelock House West Perth (4,856), 144 Stirling Street (11,042), 42-46 Colin Street,
6 — Centuria Group chief executive 87,011 West Perth WA (8,439), 45 Francis St (22,013), William Square Northbridge (21,765)
Mr Lim Chow Kiat
7 — GIC Real Estate Chief executive 57,788 The Quadrant (23,309), Exchange Tower (34,479)
Mr Jonathan Callaghan
8 — Investa Property Chief executive 54,679 QV1 50% (31,260 (Total: 63,964), Subsea7 House (11,447), Wellington Central (11,972)
Mr Oliver Mahe 899-927 Hay Street (14,360), 441 Murray Street (5,841), 45 St Georges Terrace (10,097), 28 The Esplanade (15,263), 18
9 Redhill Partners Partner 53,344 Brodie Hall Drive Bentley (4,350), 12-16 Catalano Road Canning Vale WA (3,433)
Mr Keith Stephens
10 — Perth Diocesan Trustees Executive officer 51,143 235 St Georges Terrace (17,836), QBE House (19,807), City of Perth Library (3,500), 565 Hay Street (7,900)
Mr Matthew Lutman Allendale Square (29,070), 585 Hay St Perth - 50% Mirvac, 50% KEPPEL REIT (444.5 (Total:889)), David Malcolm Justice
11 — Mirvac Group Portfolio manager WA 45,010 Centre - 50% Mirvac, 50% Keppel REIT (15,496 (Total: 30,992))
Mr Garth Lovelace
12 — SFR Advisory Group Managing director 41,200 Malaga Markets, Wanneroo Markets
Mr Russell Gibbs
13 — Hawaiian Chief executive 40,283 London House (16,536), Parmelia House (14,351), Parmelia Hilton, Bishop's See 50% (9,359)
430 Roberts Rd Subiaco (1,657), 437 Roberts Rd Subiaco (3,695), 450 Roberts Rd Subiaco (2,198), 100 Havelock St West
Mr Mark Hector
14 — Qube Property Group Managing director & partner 39,845 Perth (4,670), 170 Railway Rd West Leederville (3,285 JV with WALGA), 999 Hay Street (11,770), Hilton Shopping Centre
(1,900)…
Nicholas Ozlanski
15 — St Martins Properties Property manager, WA 39,582 St Martins Tower (21,470), Calibre House (10,661), 40 St Georges Terrace (7,451)
Mr Justin Arter
16 — Cbus Super Chief executive 36,000 one40william (36,000)
Mr Ross Robertson
17 — Perron Group Managing director 34,494 50% Central Park (32,905, (Total: 65,811), Perron Group - 4 Plain St (1,465)
Mr Daryl Browning
18 — ISPT Chief executive 33,038 100 St Georges Terrace (27,000), City Central (6,038)
19
Data & Insights GET THE FULL LIST ONLINE businessnews.com.au/bniq/property-commercial-owners
37
All information compiled using surveys, publicly available data and contact with industry sources. Other companies may be eligible for inclusion. If you believe your company is eligible, please email: claire.byl@businessnews.com.au
WND: Would Not Disclose, NFP: Not For Publication, N/A: Not Applicable or Not Available.
34 | February 15, 2021
SPONSORED CONTENT
Camping, glamping and luxury resorts
Humfrey Land Developments knows the beauty of the north
A number of major Lodge Resort in Exmouth, “Glampers will be able to its region by developing exploring the town,”
development projects and Geraldton’s 1,960-lot look out over the reserve accommodation and tour Mr Humfrey said.
underway in the Mid West Wavecrest Estate. bushland and feel immersed experiences that cater to “We’ve already
and surrounding areas are set “We want to create by the nature in an A Class higher yielding tourist decontaminated the site,
to bolster the local tourism accommodation options reserve, while only being markets. completed the project IP,
industry as the potential worthy of the brilliance of roughly 60 metres away from Humfrey Land completed the earthworks
for the region becomes Leeman, Geraldton and the beach,” Mr Humfrey said. Developments has plans to and now await approvals to
increasingly apparent. Exmouth,” Mr Humfrey said. “And we have the full meet that demand, with the commence the build.
From revamped camping Having purchased Leeman’s support of the local council development of its luxury “It’s our aim that both the
sites and fresh glamping tents 3.4-hectare caravan park in who agree the recent boom Norcape Lodge Resort. Leeman Caravan Park and
set among the bushland, to a 2004, Leeman Investments in intrastate tourism has been The resort site is the Norcape Lodge Resort
two-storey resort overlooking Pty Ltd recently acquired an great for the coastal towns of immediately adjacent to the will help meet the current
the ocean; Humfrey Land additional 1.4 hectares of Leeman and Green Head.” town’s completed canal and demand for more diverse
Developments’ has plans to land adjacent to the original According to industry-led marina developments and accommodation options in the
make Leeman, along with property, which will be Tourism Geraldton’s Tourism overlooks Exmouth Gulf. north west and attract even
the wider Mid West, a holiday reserved for the ocean-view Charter Report (2017) tourism The site will comprise more visitors to appreciate
destination worth pointing out apartments and two-storey within the Mid West’s visitor 212 apartments with onsite these impressive regions.
on the map. resort, featuring a restaurant economy is worth $148 million amenities that will include a “We’re also looking forward
Having grown up in and bar. per annum and contributes restaurant serving premium to making headway on with
Geraldton, it’s been Barry “Leeman is such a wonderful to 5.4 per cent of local locally sourced seafood, a Wavecrest Estate, which
Humfrey’s vision to build upon fishing spot and tourist employment with capacity kiosk, retail store, swimming has had the structure plan
the vibrancy and prosperity of destination, and we need to be to grow. pool, day spa and gym. approved to include a caravan
the Mid West since establishing offering more accommodation The Mid West Tourism With top floor suites park, town centre school,
Humfrey Land Developments options in the area to meet the Development Strategy, overlooking the Gulf, the northern recreational area,
(HLD) in 1988. growing demand during peak commissioned by Mid West apartments designs range lots ranging from 420 square
HLD began with the tourism season,” Mr Humfrey Development Commission from 25m2 with a 2.8m2 metres to one hectare,
68-block Springdale Park said. and Regional Development veranda to 84m2 with an 8m2 and resort.”
in Geraldton and quickly “The apartments will be a Australia, found the number balcony. “I’m excited to progress the
progressed to larger projects, great addition to the park, one opportunity for the Mid “We’re really excited to plans for the resort, which
including: the 800-lot Seacrest with nice long balconies out West to meet its tourism bring this project to life. will sit on a 20-acre block on
Estate, the $46 million the front to watch the sun go potential was to increase Exmouth is such a vibrant top of the Moresby Ranges,
Broadwater Mariner Resort, down over the water at the accommodation capacity from tourist destination, and this overlooking the ocean,” Mr
the restoration of the heritage end of the day.” camping through to resorts. will be the perfect platform for Humfrey said.
listed Flour Mill Estate, Following the development “With coastal towns
and more. of the park extension, which booming during COVID-19
Currently, HLDs most will increase the park from thanks to intrastate travellers,
significant projects include 140 sites to 219, Mr Humfrey I think people are just
the development of the intends to revamp the existing beginning to wake up to the
Leeman Caravan Park, which amenities. beauty of the area’s north of
is set to undergo a dramatic Glamping options will also Perth,” Mr Humfrey said.
transformation next year, be instated off the back of the According to its Investment
starting with the development site, offering visitors a chance Prospectus (2021), the Shire • Property Development and Sales
of ocean-view apartments, the to experience comfort in a of Exmouth is focused on • www.hld.com.au
development of the Norcape natural environment. increasing visitor spend to • (08) 9964 8028
February 15, 2021 | PB
FEATURE COMMERCIAL PROPERTY
property, that’s our view,” Mr Pat-
rick said.
Investors
“The experiences during COVID
really did show that; we accrued
97.5 per cent of our expected rental
income during the COVID period
target
and that compares well to some of
the other traditional commercial
property sectors.”
medical
The Property Council of Aus-
tralia found Australia’s commercial
landlords outlaid an estimated $4
billion-plus last year, as a result of
property
rental relief and assistance under
the commercial tenancies code,
implemented in light of COVID-19.
“It’s a very good real-world
example of the defensive nature
of health care, and tenants wer-
en’t immune to COVID,” Mr Patrick
said.
“There was certainly a decline in
some volumes, but not sufficiently
enough that their ability to pay
rents was affected.”
Barwon entered the WA market
in 2017 with the acquisition of
Vasse Medical Centre and has
added four more assets to its
WA portfolio during the past 18
months.
Mr Patrick said while the group
did not have a preference in terms
of asset location, the discounts
available in WA boosted its appeal
relative to the east coast.
The group’s latest WA acqui-
ACTIVITY: Derek Barlow says the cumulative value of WA medical asset sales in 2020 was almost double that of 2019.
sition was the Murray Medical
Centre in Mandurah, located close
to the 260-bed Peel Health Campus.
Health care assets are becoming increasingly attractive to commercial The $14.2 million deal was bro-
property investors seeking to diversify and de-risk their portfolios. kered by CBRE and follows several
recent transactions in the local
health care sector, including the
Katie McDonald Mr Patrick said that, as gov- institutional-grade asset class, is 14 years, new hospital leases are $22.9 million sale of a three-storey
katie.mcdonald@businessnews.com.au ernments held a large portion of would emerge, which I think it typically 20 to 25 years, or even up multi-tenanted medical facility at
assets, health care real estate had really has done now.” to 40 years; it’s pretty rare you see 2 Civic Boulevard in Rockingham.
H
EALTH care real estate not historically been on the radar That growth factor, coupled that duration of lease lengths in The property was purchased
was a relatively untapped of large domestic institution- with the pandemic, Mr Patrick traditional commercial property.” by ASX-listed real estate fund
market in Australia when al-grade fund managers. said, had helped accelerate interest By comparison, the WALE for manager Elanor Investors Group
Barwon Investment Partners But the class has been top-of- in the space. office and retail typically sits and was the organisation’s fourth
bought its first medical-related mind internationally for some time. “The events associated with around three to five years, with acquisition since its health care
property seven years ago. “If you look at more mature COVID, the recent market volatil- 10-year terms at the high end of investment fund was launched in
In the years since, the Syd- markets like the US or the UK, all ity and the change in sentiment the scale, usually bundled with March 2020.
ney-headquartered independent the big pension funds and super towards some of those traditional multiple additional year options
fund manager has built a more funds have health care as one of asset classes, particularly retail, has for renewal. Sales activity
than $1 billion portfolio of health their core strategies,” Mr Patrick meant that people are still looking “We think the risk-reward for CBRE WA capital markets asso-
care assets across two strategic told Business News. to place capital in property … but investing in health care is sig- ciate director Derek Barlow said
funds, including about $50 mil- “It exhibits defensive attributes; they’re looking at other places they nificantly higher, and has been, property in the health care sector
lion worth of property in Western as most people know, health care think they can get secure income- than in traditional commercial had strengthened in the years
Australia, according to Barwon is fairly countercyclical and the based returns,” he said.
partner Tom Patrick. tenants that we have in our prop- “Health care is a natural place
Barwon’s portfolio includes erties are very large organisations to look; it’s non-discretionary in There are considerable growth
primary facilities (medical cen- or state governments. nature and it’s often government
tres and allied health facilities), “Health care is also a growth funded, so the income that’s gen- opportunities for WA’s health care
pathology laboratories, mental industry; the real growth returns erated by our tenants and their
health clinics and day surgeries, for health care in Australia have ability to continue to pay rent is property sector, particularly for
as well as large tertiary health been about four and a half per cent. very strong.
mental health, medical research and
care facilities, such as private “So, it would be natural that “The weighted average lease
hospitals. health care real estate, as an expiry (WALE) of one of our funds medi-tourism assets - Derek Barlow
36 | February 15, 2021
COMMERCIAL PROPERTY FEATURE
50m
AUSTRALIAN DIRECT PROPERTY TOTAL RETURNS SINCE 2008
$ Australian Direct Property Total Returns Since 2008
400
Healthcare total return index
BARWON ASSETS IN WA 350 Hotel total return index
Industrial total return index
following the GFC, with total Office total return index
returns for health care surging 300
All property types total return index
above other asset classes. Rental total return index
He said the asset class had 250
become more attractive during
COVID-19, with tenants providing 200
an essential service and health
care a priority for government 150
support.
“The cumulative value of WA 100
medical asset sales over $5 million
almost doubled from $42 million 50
in 2019 to $78 million in 2020,” Mr
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Barlow told Business News.
“Since October 2020, three
significant health care assets Source: MSCI/PCA Property Digest
transacted in WA, and each at a Source: MSCI/PCA Property Digest
yield of below 6 per cent.
“These trends are evidence that
the health care property sector
has been firmly adopted as a pre-
ferred investment class in the WA
market.”
Mr Barlow said investors were
influenced by the long lease-terms
and high cost of relocating medi-
cal facilities, which meant tenants
were generally more inclined to
stay in place, creating a more reli-
able investment.
“As the sector emerges as a
proven investment class, pri-
vate and syndicate investors are
now actively participating in the DEVELOPMENT: The Murdoch Health and Knowledge
market, particularly in the sub $20 SOLD: The Murray Medical Centre in Mandurah recently Precinct will accommodate a range of medical facilities
million bracket,” he said.
sold for $14.2 million. as well as residential and commercial space.
At the other end of the market,
sales activity has also ramped up,
particularly for smaller day clinics. The diversity and prevalence of exception of major industrial Working with Burtonwood commercial office space, retail, res-
One of the most recent transac- health care tenants was another properties in Perth’s eastern Investment Partners to identify idential dwellings and a medihotel.
tions was the $2 million sale of a appealing attribute. suburbs.” and secure land, Sophron plans to Stage one, featuring the medi-
character building in West Perth Independent property group build a 62-bed centre on a 2.1-hec- hotel is expected for completion
to Perth cosmetic surgeon Guy Y Research analysed 50 suburbs Developments tare site about 1.5 kilometres from in 2022.
Watts. across Perth and found that each, A lack of facilities in certain Busselton town centre. The $256.7 million expansion
The deal was brokered by Ray on average, was likely to contain pockets of the health care market Sophron said there were cur- of Joondalup Health Campus is
White Commercial WA senior 15 medical occupiers: general prac- was another factor likely to drive rently no private inpatient facilities another major medical develop-
commercial property adviser tices, dentists, physiotherapists long-term demand, Mr Barlow said. for acute mental health needs in ment in the works.
Brett Wilkins, who said the health and pharmacies. “In recent years, there has been an the whole of the South West. Multiplex was awarded the
care sector had remained resil- Y Research director Damian undersupply of WA mental health Greenfield developments, co-lo- early contractor involvement
ient despite the issues caused by Stone said the corporatisation facilities, and with the additional cated with private hospitals, is tender in January, with expansion
COVID-19. of medicine had been another challenges for the community another emerging trend shaping work expected to be completed by
Mr Wilkins said he expected catalyst for driving significant … from the COVID-19 pandemic, the health care property sector. late 2025.
appetite for medical-related prop- demand for medical assets across demand has far outstripped supply That includes the state’s larg- “There are considerable growth
erty to continue to grow, in line metropolitan and regional WA for these assets,” he said. est medical-related property opportunities for WA’s health care
with the anticipated growth in from listed and unlisted property “With the state government’s development, the $200 million property sector, particularly for
health care services, due to popu- funds. record $306 million in additional Murdoch Health and Knowledge mental health, medical research
lation increases and the growing “This demand has focused on funding towards mental health Precinct, which is being developed and medi-tourism assets,” Mr
number of older Australians. GPs, private pharmacies and major services, we are now seeing a pipe- by Hesperia in partnership with Barlow said.
Other key influencing trends, specialists such as radiology,” Mr line of developments planned or DevelopmentWA. “Australia’s performance through
he said, included the increase in Stone told Business News. under way to cater for this.” The 9.6ha site, adjacent to the recent COVID-19 pandemic has
free-standing (day only) hospital “Demand for high-quality med- Sophron Healthcare recently Fiona Stanley Hospital, will be made our economy and health care
activity and the rise in the number ical assets would likely outstrip lodged a $20 million proposal for developed into several buildings system even more attractive to our
of people covered by private demand for all other commer- a new South West Regional Mental accommodating aged care facil- South-East Asian neighbours and
health insurance. cial property assets, with the Health Hub. ities, medical suites and centres, the world as a whole.”
February 15, 2021 | 37
Data & Insights
Showing 6 of 3,702
Commercial Property
SPECIAL REPORT
Commercial centre sells for $16m
Greenfields Commercial Centre is the latest acquisition for Perth-
based Mair Property Funds. The mixed-use ... commercial centre in
Mandurah is the second asset to be purchased under Mair Property
Funds ’ MPF Diversified ... Cash said.
Property industry flags immigration, CBD ahead of
state poll
property industry. Photo: Gabriel Oliveira By Jordan Murray
Property Government Ministerial roles ... overseeing immigration,
investment, population and Perth’s CBD are just a few changes the
property industry ... will lobby for ahead of the state election. That’s
according to the Property Council of Australia WA ...
Ord St overhaul boosts office occupancy
The three-storey building features 1,105sqm of lettable area.
Perth office vacancies rise
office market in our annual commercial property feature in the next
magazine edition of Business News, ... Gabriel Oliveira By Katie
McDonald Property Perth has maintained its position as the city
with the most ... empty offices in Australia, with the CBD office
vacancy rate hitting 20 per cent. The Property Council ...
‘Nothing is off the table’ regarding rates, Zempilas
Basil Zempilas has affirmed his support for incentives to help
resolve commercial vacancies in ... Perth’s CBD. Property
Government A $30 million plan to build a seven-storey apartment ...
green light. The development, spearheaded by property development
and investment company Australian ...
$40m CBD office one step closer
Environmental conservationists fighting ... Perth’s first ocean
pool,12,000sqm of retail and commercial spaces, 550 boat pens, 320
trailer parking ... commence in the coming months, with completion
expected by mid-2022. GDI Property Group ...
Photo: Stockphoto
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