Commercial rent expectations for 2015: CBRE

While the economy’s not booming, it is improving, according to CBRE’s Market Outlook Australia report.

The report notes that average yields are expected to decrease next year in retail and industrial property.

Offices are expected to see stabilising average yields.

Source: CBRE

However, while 2014 has seen a downward shift in yields in all three sectors and varying conditions in tenant markets, 2015’s limited rent growth expectations should be seen as a slight positive coming off of a softening yield year.

“Our broad view is that prime yields will stabilise through the year as the rent cycle is weak and IRRs remains steady. Further softening in Perth/Brisbane offsets modest compression in Sydney/Melbourne in 1H 2015,” the CBRE report noted.

Looking towards industrial, however, they noted that prime warehouse continues to perform well in comparison to secondary stock. Those with prime warehouse assets may see some rental growth.

Larger format retail and sub-regional/neighbourhood centres are also expected to outperform in the retail category, while those with prime retail may not have such a good 2015.

For the majority of commercial assets it seems CBRE is predicting a slow growth environment.