CRE Weekly #2 - Industrial hotter than office

As discussed in Edition #1 of the Commercial Real Estate (CRE) weekly this section of Narrowboat's blog provide an overview of major International CRE headlines (mostly via links) with the majority of the insight/analysis taking place on the local Aussie market

International markets

• Good news Lloyds announced it would enter the UK BTR market (approximately one month after Macquarie launched its Goodstone BTR platform)

• ARA LOGOS Logistics Trust will be joining the NAREIT Global Index from Sept 20 onwards.

• Bad news continued for China’s Evergrande who reported profits would be down 29-39% for latest HY results

Aussie Offices

• Being a quieter week for the office sector... Cromwell sold the Icon building in Ipswich for $144.9m to Castlerock. The nine-storey building, with 17,870sq m of commercial space, was built in 2013 and went for + $16.4m above the previous book value

Aussie Sheds

• CBRE announced Aussie shed cap rates were tighter than offices: CBRE announced record cap rate compression for industrial property.

  • Although no directly comparable they gave the example of 25% sale of Farrer Place on a 4.39% yield vs. AMP capital sale of Best and Less warehouse at 3.62% yield.

• Interestingly the research also noted that despite a surge in sale and leasebacks industrial ownership is 50-60% institutional vs.office market is c.90-95% institutional

Aussie Build-to-Rent

• Macquarie & Partners Groups are targeting a site at 346-350 Macaulay Road in Kensington. Originally bought by United Asia Group in 2018 for $35m for redevelopment, they have opted to list it for sale for c.$50m. Macquarie intends to make a 424-apartment development (6x 8 storey buildings) from the 8803 sq m site

• HG Developments are set to develop a new $60 million apartment in 24-30 Austin Street, Newstead North in Brisbane. To give you a flavour at where these are being priced – one-bedrooms will be priced from $580,000 for 96sqm and four-bedrooms at $1.415 million for 173sqm.

Other random resi headlines

• Finally, although all headlines should be “taken with a grain of salt” Gurner plans to build 400 apartments, over 40 levels on the 1652sq m site at 334 City Road in a joint venture with the Catalfamo family.

Retail

• Dexus has listed a 25% interest in the Macquarie Centre in Sydney’s north and a 20% interest in Pacific Fair on the Gold Coast for collectively $700 million.

• Elanor was actively marketing its recent purchase of Bayview and Warrawong from Blackstone. A snippet of their active marketing can be found here