Canberra's office market sees flurry of leasing activity: HTW

The top end of Canberra’s office market has been very active with landlords of A and B grade buildings in the city negotiating extensions to leases for terms close to 10 years, say valuation firm Herron Todd White in their Month in Review report for September 2016.  

HTW’s report deals with the broad picture of the capital city’s office market with deals and analysis.

Incentives for leasing deals are running at close to 30 percent with a face rent of circa $400 to $420 per square metre. A number of these properties are currently being offered to the market post-lease negotiations, say HTW. 

One example is 62 Northbourne Avenue, with a new lease expiry of June 2026. The building is early 1990s and has been progressively upgraded over the years to retain its competitive position in the market. 

There have been a number of recent transactions at the upper end of the market in the first half of 2016, including: 

• Aviation House in Woden sold by Mirvac to a Queensland-based private investor for $68.1 million, showing a 9% return with a WALE of close to five years. This is a five-year-old building with a residue of a 10-year lease in place.

• 14 Mort Street sold for $41.5 million showing an initial yield of 7.5% with a WALE of circa eight years. This is an older building, that has been maintained to retain its competitiveness with a new long term lease in place.

Another sale concluded was 92 Northbourne Avenue, the former long-term home of the NRMA, for $25.025 million to local developer Geocon. 

Geocon is reported to be considering developing a 140-room hotel for its Abode hotel group and 350 apartments for the market. The site has an area of 6,260 square metres. 

A sale in the city which has attracted strong interest due to its sub-$2 million price is 25 Garema Place for $1.9 million. Two tenants occupy the building, a bar on the ground floor and a hairdressing studio on the upper level. 

The WALE is reported to be 5.5 years. Fully leased standalone buildings seldom hit the market in this retail location and the yield achieved of circa 5.4 prcent reflected the scarcity value at this price point. 

The city market is strong and further sales are expected before the year end.