Dexus looks for CBD office space in improving market

Larry SchlesingerDecember 8, 2020

Property group Dexus will look to acquire CBD office assets in the forthcoming financial year and has positive overall market outlook, according to its 2010-11 annual results. 

The group’s office portfolio, which comprises 60% of its $7.5 billion property book, delivered a return of 9% while its Australian industrial assets, which account for almost a quarter of its portfolio, returned 9.4%. 

Overall Dexus delivered a net profit of $553 million, an increase of $521.6 million on the previous year. 

In his CEO report, Victor Antink says he expects property markets will continue to recover in 2012. 

The Australian office market experienced 12 months of “above-average demand across all major markets driven by a strong domestic economy and robust employment growth,” the results show. 

During this period national vacancy rates continued a downward trend, with CBD vacancy hitting 7.6%. 

Nearly two-thirds of its office assets (65%) are held in Sydney, followed by Melbourne (14%), Perth (10%) and Brisbane (8%). 

The group completed 113 leasing transactions covering approximately 74,240 square metres of space during the year, providing increases in average rental income of 4.6% and a stable average lease duration of 5.3 years. 

“Vacancy is expected to remain relatively steady with below-average supply coming online over the next two years. We have seen increases in tenant enquiry over the year, particularly in Perth,” the report says. 

In Sydney, Dexus reported that international tenants, which make up a large proportion of the financial services and investment banking presence in the CBD, remain cautious and continue to delay relocation decisions – “due to continued uncertainty in the global economic markets”. 

During the year, Dexus completed 1 Bligh Street tower in Sydney with Clayton Utz signing on as the major tenant, taking up the lower 15 floors of the 29-storey building. The Commonweath government is considering moving its NSW office to the building.

The $667 million development (Dexus share $227 million) is forecast to deliver a fully leased yield on cost of 7% and is currently 55% leased.

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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