Lucas Real Estate and the current state of play in Docklands

Urban.com.au recently sat down for a chat with Lucas Real Estate Managing Director Glen Lucas along with Director of Property Management and recent recipient of the Property Manager of the Year award, Dylan Emmett. On the agenda was the current state of the Docklands and its progress during the 15 years Lucas Real Estate has been active in the precinct. With an office located on Docklands Drive, it has provided Glen and the Lucas Real Estate team with first hand experience of the Docklands dynamic and its continued growth.

Recent criticism of the area, they say is unfounded and what Docklands really needs is time to develop, a continued influx of residents, some more quality food and beverage offerings and a waterfront drawcard that is unique to the area.

Urban.com.au: Is it fair to say that you have had a heavy focus on Docklands? How did you come to be involved in the area?

Glen Lucas: I was in Docklands from 2000. I worked for MAB Corp for about 3 years and helped to set up Metro Real Estate which was their early real estate business, and then I began Lucas Real Estate. I had a property which one of the project developers wanted me to sell for him, which I did, but I didn’t realise so many owners down here were trying to lease their apartment out and they were sort of stuck with the developer and their real estate arm because there was no independent at that time. I was having people throw keys to me saying “Glen can you rent this out… can you sell this for me?”.

Very quickly my little business started to take off and a year or so later Mirvac approached me to buy their rent roll. Ultimately we bought their sales centre down at Yarra’s Edge and I guess that was my first retail real estate position location. In 2006 the market really began to rumble along and there were three of us that went there first, within a year there were about 10 of us and so on. I started ringing up Andrew Buxton asking “Andy when are you going to sell Metro Real Estate?” and every year he’d say “there’s a few agents after that Glenny”.

Eventually we purchased it and we’ve got a great relationship with MAB, we manage the marina down here on their behalf and also the car parking contracts as well.

We now have about 35 team members, two real estate offices and we’re really keen to open up an office in the CBD or Southbank, and even though we’ve looked at a few opportunities, we feel the best opportunity for us is to get the people and then proceed with the office.

UM: What are your thoughts on the current state of the market in Docklands?

GL: Last month was a ripper month for us with about 26 sales, very active with a lot of people making decisions and you know the really interesting figure is that 70% of our buyers are owner occupiers, and we see that as a real good news story for Docklands; that people are actually wanting to come down and live here in Docklands.

But I think the market is a bit patchy, it’s a different market altogether to other Melbourne areas such as Hawthorn, Kew, those sorts of areas where there’s a shortage of stock. Days on market average around 129; we average 71 days so it’s how you market and how you draw your people, but no we don’t have 20 groups coming through for an open for inspection, if we get 2 or 3 we feel that we’re pretty fortunate.

UM: What are resale values like in Docklands?

GL: If you go back to some of the earlier buildings you’ll get good gains, naturally the later buildings that are sold at $9,000-10,000/sqm are struggling to get to that sort of level although we do from time to time, but it depends on specific buildings. We’ve probably sold about half a dozen in The Quays that have either delivered people returns or close to.

I think what it comes down to is you hear a lot of reports on the market from out of area agents coming in here and not understanding Docklands, whereas our view is very simple: you have to explain what Docklands is going to look like in the future to prospective buyers. So if they have a reasonable understanding then they’ll pay a good price for the property. But if you try and sell it as someone who doesn’t know anything about the Docklands, who doesn’t know what the next tower is or infrastructure will bethen they’ll struggle.

Dylan Emmett: I think what we see down here, where there’s quality put into a development both the initial release, the secondary market and the rental market goes very strongly. Look at Mirvac's T5, which is a perfect scenario that when developer’s build quality stock people will pay good money for it.

UM: T5 would have to be one of the more sought after addresses in Docklands wouldn’t it?

GL: T5 was probably one of the better towers. 125sqm, two bedroom apartment with a 40sqm balcony and two car parks and as you guys would know, that’s a 3 bedroom or even a 4 bedroom in some other buildings. But then there’s also the facilities available was well and Mirvac certainly have a very good reputation and a good following. Their clientele generally consist of multiple buyers of Mirvac product – they do the databasing really well – so that when they do go to the market they can rely on about 20% of past clients buying into that building so their machine runs pretty well.

Lend Lease have done really well with their Convesso Concavo development as well - two high quality north facing towers; we'd love to get in there and be a bit more active.

UM: How has it been for you watching the Docklands develop over the last 15 or so years?

GL: Amazing. I’d go on holidays, be away for say two weeks and then I’d be rushing in to see what’s gone up… some of the towers now, as you would know go up a floor a week. I’m glad Harbour Town has sold and that there will be major changes and renovations to Harbour Town.

UM: There was a figure floating around of something like $1B worth of investment in Harbour Town by Ashe Morgan, the new owners.

GL: Well there’s a lot of space back there so I really hope they do. ING just weren’t investing back in their real estate side of their business.

UM: As specialists in the area, in terms of a policy or infrastructure what would you like to see?

GL: In terms of policy, I’d like more attention put into transport in the area here. I think if you’re on the corner of Lorimer and Montague at 8:30 in the morning or 6 at night you have no idea where the traffic is going, you don’t know what lane you’re supposed to be in – it’s just insane that intersection! And if they’re building another 29 buildings at Fishermans Bend they’re going to have to really have to do something about the transport there for sure. I think it’s something that is pretty critical.

As far as any sort of attraction is concerned I think either the wave pool beach concept, or the fountain in the middle of Victoria Harbour would be fantastic attractions down here in Docklands. The area does need something that will draw people back down here to help the retailers and restaurateurs draw crowds down here.

UM: The immediate area at NewQuay and Harbour Town will be getting another good influx of residents with MAB’s Aqui and NewQuay Promenade developments together with HiapHoe’s Marina Tower and hotel now under construction.

GL: For sure, that will definitely go some way to helping the area along, it’s all a cycle.

UM: What sort of demographic do you find moving to Docklands?

DE: Generally couples and empty nesters…

GL: The kids have left home and they're tossing up what they're going to do with their lives.

DE: A lot of their families are spread across Melbourne, left, right and center so it's a great position geographically for them to base themselves down here.

UM: Does it differ for the rental market?

GL: Actually, that's a good point.

DE: You still get a fair percentage of them but the majority of our renters are basically CBD workers.

GL: And not overseas students as some people like to believe. What percentage would they make up Dylan?

DE: Less than 5%. So very few. I think it's because we're a bit away from the universities so they still gravitate towards the CBD.

UM: Why do you think Docklands generates very little positive press in the media?

GL: I think it's an easy target for lazy journalists. They may have had a bad meal (laughs). They probably have a deadline and need an easy story so they pick between Tony Abbott or Docklands, they don't really understand that it's a developing suburb barely just over half way complete as we speak… there's a lot more to Docklands still to come.

UM: Planning experts and journalists often like to compare Docklands to the existing Hoddle Grid and criticise it for lacking the same atmosphere and activity. But if you look at Melbourne's CBD 20 years ago, and we're talking about an established city with over a century of history behind it, it was pretty much dead after work hours. You compare that to Docklands which is still establishing itself as part of the city but has only been around 15 years you can't expect the same result.

GL: And that's pretty much it. You've got to give it latitude and allow the growth to occur over time. There was a report just recently, maybe 3 or so months ago about vacancies in Docklands. It actually referred to water consumption in Docklands buildings.

Some company put out a report and a journalist picked it up and ran with it when in actual fact we have here less than 2% vacancy. We cannot get enough stock to satisfy the demand and number of inquiries we receive from renters averages 110 per week.

DE: The Quays is the best example of the most recently completed building whereby that was full within 4 and a half months and that's 500 apartments. Typically in the past it has taken up to six months to fill a building so I think it's a really good indication of the increased activity that we currently have in Docklands.

UM: Gentlemen, thank you both for your time.