Private investors dominate the Gold Coast office market

Private investors continue to drive the demand for office buildings on the Gold Coast, making up about 80 per cent of the sales September year to date, with the Robina-Varsity lakes precinct recording the most activity.  

As per the latest research from Colliers International, the volume of settled sales for properties above $5 million has reached circa $73 million in the first nine months of the year, sitting above the 2018 total volume of sales of $66 million. The Robina-Varsity precinct represented 75 per cent of the total volume of sales this year or $53 million.

“Whilst we have seen a small increase in investment activity compared to last year, investment opportunities above $5 million remain tightly held,” said Steven King, Director-in-Charge Colliers International Gold Coast.

“Interestingly office development site transactions acquired by unlisted funds and private syndicates have reached circa $14.2 million over the year to date, which represents nearly 20 per cent of the volume of sales.
“Gold Coast investment market continues to operate as a value/yield driven market, with the average yield spread widening over the past 18 months and sitting in the approximate range of 50 to 150bp when compared to the Brisbane CBD and Metro markets. Yields for A grade assets fluctuate in the range of 7 to 8 per cent, underpinning a solid value proposition for investors on the Gold Coast.

“The most notable settled sale was the transaction of the A grade building located at Lake Orr Drive in Varsity Lakes for $25.4 million which was acquired by Argus Property Fund syndicate at an initial yield of 7.41 per cent. 
“And a notable recent asset repositioning was the sale of 130 Bundall Road in Bundall for $11 million at a passing yield of 5.4% which sold to an owner occupier. The office building was partially refurbished by the previous owner who acquired the property in mid-2017 for $7.5 million,” said Mr King.

Renee Hughes, Manager of Office Leasing at Colliers International said Surfers Paradise has been the most improved leasing market on the Gold Coast over the medium term. 

“The vacancy rate in Surfers Paradise tightened from circa 30 per cent in July 2015 to 10.5 per cent in July this year following a cumulative net absorption of circa 13,500sqm equivalent to 19 per cent of the precinct’s stock.

“We anticipate that the A grade market in Surfers Paradise will continue to attract moderate demand from tenants, supported by steady to tighter vacant space, and development activity restricted to refurbishment projects.

“Looking at the market overall, tenant demand has been subdued over the first half of 2019 as some public and private sector tenants have implemented a workforce downsizing strategy in the attempt to reduce costs. 

“State Government has reduced office occupancy at the Robina-Varsity Lakes precinct over the past six months, partially explaining the market negative net absorption of 6,850 sqm (which sits well below the historical average net absorption for the past 3,5,10 and 20 years).

“Under current market conditions, we see significant opportunities for landlords and tenants to add value to the market and their businesses. Tenants can seek alternative accommodation to meet their current needs potentially accessing improved rental conditions in the way of incentives or rental abatements.

“The average incentives have increased from 12 per cent in March 2019 to 15.3 per cent in September 2019, sitting at historical average levels. We anticipate incentives will hold firmly at historical averages or continue to trend upwards until the vacancy falls to single digit levels.

“Landlords could reposition the assets to better meet the market needs. Refurbishment of any size could be used as a repositioning strategy to improve the income and performance of the building by redefining the tenant profile and maximising the floor plate,” Mrs Hughes said.
 

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Steven King

Director in Charge | Gold Coast

Gold Coast

As the Director in Charge of the Gold Coast office, Steven is responsible for the continued success and growth of an award-winning team across multiple service lines. As part of his dual-role, Steven also represents Colliers International as the Director of Investment Services in a transactional based sales management role.

Working within our national platform, we share knowledge and have a collective commitment to deliver the absolute best results for our clients. 
In 2018, our Gold Coast office received the prestigious Real Estate Institute of Queensland ('REIQ') Commercial Agency of the Year Award.

Steven specialises in the marketing and sale of high profile commercial assets and with over 17 year’s experience, he has negotiated more than $500 million in local property sales. Steven offers an unrivalled track record in commercial sales and his in-depth knowledge and expertise of the local commercial market is second to none. Steven provides clients with a high level of service that extends beyond a traditional sales appointment by utilising both innovative and effective marketing strategies.  

Previously Steven has been honoured to receive the REIQ Commercial Salesperson of the Year Award.

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Renee Hughes

Manager I Office Leasing

Gold Coast

Renee began her career in real estate in 2004 within Commercial Leasing and for the last 14 years, has specialised in the field of Office Leasing Executive. She is close to finalising 500 commercial transactions over this time. Taking on the role of Manager of Office Leasing for Colliers International Gold Coast, she has dealt with high calibre  key clients as well as prominent office buildings over the Gold Coast region.

With an integral understanding of all facets of the Gold Coast office market, together with an unrelenting work ethic, she ensures that optimum results are achieved for her clients.

Renee’s expertise includes dealing with customer relations, coordinating leasing projects, working for both Lessors and Sub lessors, as well as brokering transactions for tenants seeking office premises for lease.

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