Canberra cbd office research forecast report second half 2012


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Canberra cbd office research forecast report second half 2012

  1. 1. SECOND HALF 2012 | OFFICERESEARCH & FORECAST REPORTCANBERRA OFFICE Vacancy Declines but Future Supply Increases Loom The Canberra region office market continued to see positive net absorption, and decreasing vacancy levels over the six months to July 2012, changing the dynamic from a tenant-driven market to a more balanced equilibrium between tenant and landlord. The vacancy rate has now reached its lowest level since January 2010, following 12 months of positive net absorption and limited new development. Although there has been very little new development over the past 18 months, a new supply cycle is currently in play with 14 buildings to be completed or refurbished over the next 18 months. Eight of these buildings are scheduled for completion in the next six months totalling 140,704m². In 2013, six more buildings will complete, adding a further 62,221m² of space. Although the majority of space is pre-committed a large amount of back fill will enter the market, pushing up the vacancy rate. With limited new supply available over the last 12 months the Canberra region has seen strong rental growth in both A Grade and secondary assets as tenants compete for space. Both A and B Grade net effective rents saw growth over the 12 months to July 2012, with 4.1% and 3.6% respectively. This is the strongest growth seen since 2008 for A Grade assets and 2007 for B Grade assets.50 Marcus Clarke Street, Civic Investment sales activity over the first half of 2012 has been strong, with four major transactionsThe sale of 50 Marcus Clarke Street marked the completed. Total sales volumes have already surpassed the total sales of the past two years withlargest sale in the Canberra region in the past fiveyears. The property was sold to CIMB Trust Capital $377.8 million having been transacted. Offshore investors have been particularly attracted to thefor $225 million. Canberra market, dominating total sales volumes for the first half of the year. Steady investor interest has meant that yields for A Grade assets have remained unchanged over the last two years, while B Grade assets have reached the bottom of the market cycle in over the first half of 2012.MARKET FORECAST INDICATORS–6 MONTHS OVERALL PERFORMANCE NEW SUPPLY TENANT DEMAND VACANCY INCENTIVES CANBERRA REGION OFFICE MARKET INDICATORS FACE RENTS Average Net Average Average Average Average Grade Precinct Face Rents Outgoings Capital Values EFFECTIVE RENTS Incentives Market Yield* ($/m2 pa) ($/m2 pa) ($/m2 pa) CAPITAL VALUES     LOW HIGH LOW HIGH   LOW HIGH LOW HIGH YIELDS CBD $375 $425 8% 10% $82 $5,000 $6,000 7.00% 8.00% Barton $350 $400 10% 13% $75 $5,000 $5,750 7.30% 8.00% A GradeKEY HIGHLIGHTS Woden $300 $350 10% 15% $65 $4,000 $4,500 7.80% 8.50%• nvestment sales volume has reached I Other $275 $325 10% 20% $60 $3,500 $4,000 7.00% 8.80% $377.8 million over the first six months of 2012; more than double 2011 calendar year figures. CBD $325 $375 10% 13% $87 $3,500 $3,750 9.00% 10.00%• acancy levels have declined to 9.8% in the V Barton $275 $325 10% 15% $75 $3,250 $3,750 9.00% 10.00% Canberra region, this is the lowest level recorded B Grade Woden $250 $300 10% 20% $65 $3,000 $3,250 9.50% 11.00% since January 2010.• Grade net effective rents have recorded 4.3% A Other $225 $275 10% 20% $60 $2,750 $3,250 10.00% 11.50% growth in the 12 months to July 2012, B Grade *Equivalent Reversionary Yield net effective rents recorded growth of 3.6% over Data correct as at Q2 2012 the same time period. Source: Colliers International
  2. 2. RESEARCH FORECAST REPORT | SECOND HALF 2012 | OFFICE | CANBERRA REGION Economic Update STRONG Q1 2012 GDP RESULT The March quarter 2012 Australian Bureau of Statistics (ABS) Gross Domestic Product (GDP) data showed robust growth for the Australian economy during the quarter. In seasonally adjusted terms, GDP increased 1.3% during Q1 2012, up from 0.6% in Q4 2011, taking through-the-year GDP growth to a strong 4.3%, the largest annual result since September 2007. The main contributors to expenditure on GDP, during the quarter, were household final consumption (0.9 percentage points) and Private gross fixed capital formation (0.8 percentage points) while Net exports detracted 0.5 percentage points. The main industry contributors to GDP were Mining (up 2.3%), Financial and insurance services (up 1.7%) and Professional, scientific and technical services (up 2.8%). EMPLOYMENT REMAINS TIGHT The July 2012 monthly ABS Labour Force data shows that the Australia employment market continues to remain tight. The latest results showed that the unemployment rate declined by 0.1 percentage point from, a revised, 5.3% in June to 5.2% in July 2012. This saw total employment increase by 14,000 persons with both full-time employment increasing by 9,200 persons and part-time employment growing by 4,800 persons, during the month. INFLATION RATE REMAINS LOW The latest inflation data from the ABS shows that annual headline inflation rose just 1.2% during the 12 months to June 2012, down compared with a rise of 1.6% through the year to March 2012. This saw the Consumer Price Index (CPI) grow by 0.5% during the quarter and ensures that the inflation rate remains well below the RBA’s target range of 2% to 3%. Underlying inflation was also contained increasing by 0.6% during Q2 2012, taking annual growth to 1.9%. CASH RATE REMAINS STABLE Following a reduction of 50 and 25 basis points in May and June 2012 respectively, the Reserve Bank of Australia (RBA) decided to keep the official cash rate stable at 3.5%, during both their July and August monthly board meetings. The RBA judged that “with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate”. AUSTRALIAN DOLLAR SOFTENS Ongoing uncertainty over European sovereign debt issues has continued to fuel concerns regarding the global economic outlook. Combined with the slow pace of economic recovery in the United States, this uncertainty saw the Australian Dollar reach a record high in late July 2011, trading at $US110.62 cents, before slipping below parity in December 2011. After regaining value during Q1 2012, trading as high as $US1.08, the Australian Dollar fell below parity in May 2102 due to a flight by investors to safe haven assets as election results in Greece and France further clouded the outlook for the European economy. This has seen the Australian dollar recently trade between $US0.98 and $US1.03. COLLIERS INTERNATIONAL | P. 2
  3. 3. RESEARCH FORECAST REPORT | SECOND HALF 2012 | OFFICE | CANBERRA REGIONEmployment Trends and Leasing Demand• White collar employment grew marginally CANBERRA REGION FORECAST WHITE COLLAR EMPLOYMENT GROWTH over the first half of 2012 increasing by a total of 2,986 persons. This is slightly below Overall the growth of 3,877 persons recorded in the Public Administration and Safety Retail Trade second half of 2011. By sector: Professional, Scientific and Technical Services Information Media and Telecommunications• Public Administration and Safety, Retail Arts and Recreation Services Trade, and Professional, Scientific and Financial and Insurance Services Technical Services all had growth of over Health Care and Social Assistance Electricity, Gas, Water and Waste Services 1,000 people, well above the average growth Rental, Hiring and Real Estate Services of all sectors of 166 people; Other Services Manufacturing• Administrative and Support Services, Agriculture and mining Wholesale Trade Construction and Accommodation and Food Transport, Postal and Warehousing Services all recorded declines in white Education and Training collar employment with losses of 978, 687 Accommodation and Food Services Construction and 487 persons respectively. Administrative and Support Services• Retail Trade saw the greatest improvement -1,000 -500 0 500 1,000 1,500 2,000 2,500 3,000 from the second half of 2011 going from a loss of 299 jobs to an increase in Source: Deloitte Access Economics/Colliers International Research employment of 1,175 persons in the first half of 2012. Overall this is the equated to an increase of 876 persons in the Retail CANBERRA REGION NET ABSORPTION V WHITE COLLAR EMPLOYMENT GROWTH Trade sector. 200,000 3.0%• Public Administration and Safety, the 2.5% largest white collar employment sector in 150,000 2.0% the Canberra region, is forecast to increase Forecast 100,000 1.5% by only 141 persons in the second half of 2012. This would equate to an overall 1.0% 50,000 increase of 1,519 persons in the sector over 0.5% the 2012 calendar year. 0 0.0%• Deloitte Access Economics has forecast -0.5% -50,000 that white collar employment will be stable -1.0% with an overall increase of only 120 persons -100,000 -1.5% over the second half of 2012. Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 6 Mth Net Absorption Canberra Region White Collar Employment Source: PCA OMR July 2012/Colliers International Research COLLIERS INTERNATIONAL | P. 3
  4. 4. RESEARCH FORECAST REPORT | SECOND HALF 2012 | OFFICE | CANBERRA REGION Supply • Over the next six months eight buildings, • Over the first half of 2013 a further 15,516m2 or an estimated 140,704m2 of space, are is expected to be delivered with the expected to be delivered in the Canberra refurbishment of 40 Cameron Street. region. These include: 38% of this project is currently • 4 National Circuit: 28,900m2 of space is pre-committed (5,834m2). currently under construction. Owned by • Nishi (2 Phillip Law Street) is currently the ISPT Core Fund, the development has only office development under construction approximately 28% pre-commitment and is in the Canberra CBD. The only new anticipated to be completed by the end of the development anticipated for the CBD until 2012 calendar year. 2014, Nishi is currently 80% (16,800m2) • The St. John’s Ambulance site at pre-committed to the Department of Climate 18 Canberra Avenue, is a new development Change and Energy Efficiency, Australian by the Doma Group fully leased to the Competition and Consumer Commission and Department of Human Services. The Clayton UTZ. site encompasses 9,630m2 and is due for • The new Centrelink building is the only completion in the second half of 2012. development currently under construction • The largest building currently under in the suburb of Tuggeranong. This is theNishi, 2 Phillip Law Street Civic construction is the ASIO Headquarters in first new development in the area in overThe Nishi Development comprises 21,000 m2 of the suburb of Parkes. At 40,000m2 this space 12 months and will comprise 26,000m²new space in the Civic precinct. This is currently represents 26% of the overall new supply of space.the only building under construction in the CBD and anticipated to be delivered over the nextis scheduled to complete in the second half of 2012. twelve months. CANBERRA REGION CURRENT MOOTED COMMERCIAL DEVELOPMENT 2012 2013 2014 140,000 120,000 100,000 80,000 60,000 40,000 20,000 - ay ay er et et 2 St - et e s s), e et ue et ue ue ue t 63 et iv ui d 1 re re re re re W w ge W en ke en en en re Dr i rc ar ge To St n St St St ta Pa ar Av Av Av Av in St io zz ta lC lo -S 9P am rk w on le le e ct Go - S e ra w ng ra ey us na ha da da rn Se La er nj er et ue 4 er lo dn Ho lis ti o ns ns ou 1, k Be m nb re Mo e n i on nb g ar ip Sy w Lo Ca Lo hb Na ra St Ca in P ill Ca g, Co Av ct 3 rt er 8 Ph ild s in 2 2 0 4 ng n e es No ,2 8 1 -2 -1 ,4 nb io S g, ild ,1 Ki si n 2 10 in 20 30 Ca ut 1 ce Bu 2 te ild s, 2 k -7 Bu Offi Si t i t oc Bu er n 3, Bu MA io ow n s Bl 8 e in e ct n k nc AC ,6 d Co ( l lin ti o iT ah Se Mo n HQ la ex er ng xa sh bu 15 pl nt e e IO Ta Gu Ni Am m Ce AS k Co oc s Bl hn a tw un Jo Be My St Commited New Build/ Vacant Mooted Development RefurbishmentSource: Colliers International Research COLLIERS INTERNATIONAL | P. 4
  5. 5. RESEARCH FORECAST REPORT | SECOND HALF 2012 | OFFICE | CANBERRA REGIONSupply Pipeline RECENTLY COMPLETED AND PROJECTS UNDER CONSTRUCTION Estimated Current Address Precinct Office NLA (m2) Status Major Tenants Completion Commitment Rate Department of Education, 10 12 Mort Street Civic 15,398 Complete 2012 100% Employment and Workplace Relations Mode 3, 20-22 Lonsdale Street Braddon 3,270 Construction 2012 Various 50% 2 King Street - Stage 2 Deakin 2,400 Construction 2012 - 50% Gungahlin Business Park - Stage 1 - Building 1, Gungahlin 1,525 Construction 2012 - 0% Gozzard Street ASIO HQ (Block 1 Section 49 Parkes), Be- Parkes 40,000 Construction 2012 ASIO 100% tween Constitution Avenue Parkes Way 3 Molonglo Drive Airport 33,979 Construction 2012 0% 4 National Circuit Barton 28,900 Construction 2012 Attorney General’s 30% Clayton Utz, Department of Nishi Towers, 2 Phillip Law Street Civic 21,000 Construction 2012 80% Climate Change, ACCC St Johns Ambulance Site, 18 Canberra Department of Forrest 9,630 Construction 2012 100% Avenue Human Services Taxation Office, 40 Cameron Street Belconnen 15,516 DA Approved 2013 Hewlett Packard 37% PriceWaterhouse Block 15 Section 30, 28 Sydney Avenue Forrest 12,905 Construction 2013 50% Coopers  Department of Centrelink Building, Cowlishaw Street Tuggeranong 26,000 Construction 2013 100% Huma Services Australian ACMA Building, Benjamin Way Belconnen 5,800 Construction 2013 Communications 100% and Media Authority 10-12 Lonsdale Street Braddon 2,000 Site Works 2013 - 0% 1 Canberra Avenue Griffith 24,500 DA Approved 2014 Spec 0%Source: Colliers International Research MOOTED COMMERCIAL DEVELOPMENTS Proposed Mooted Address Precinct Status Owner NLA (m2) Completion Myuna Complex, 68-72 Northbourne Avenue Civic 52,000 DA Approved Mooted Walker Corporation Pty Ltd Alexander Buildings, 35 Furzer Street Phillip 20,000 DA Approved Mooted Jure Investment Pty Ltd Albemarle Building, 45 Furzer Street Phillip 20,000 DA Approved Mooted Jure Investment Pty Ltd Old ACTTAB Building, 26 Antill Street Dickson 8,000 DA Approved Mooted Amalgamated Property Group 44A Mort Street Braddon 2,500 DA Approved Mooted Mesja Pty Ltd Gungahlin Business Park-Stage 1- Gungahlin 2,250 DA Applied Mooted Undisclosed Private Investor Buildings 2,34, Gozzard Street Macquarie Street Carpark Barton 26,000 DA Applied Mooted Doma Group/Morris Property Group Section 63 Civic  126,000 DA Approved Mooted City West Property Holdings Pty Ltd. Section 84 Civic 30,000  DA Applied Mooted QICSource: Colliers International Research COLLIERS INTERNATIONAL | P. 5
  6. 6. RESEARCH FORECAST REPORT | SECOND HALF 2012 | OFFICE | CANBERRA REGIONVacancy CANBERRA REGION – STOCK AND VACANCY BY PRECINCT GRADE TOTAL PRECINCT/GRADE CBD BARTON WODEN OTHER MARKET Stock Vacancy Stock Vacancy Stock Vacancy Stock Vacancy Stock Vacancy   (m2) Rate (%) (m2) Rate (%) (m2) Rate (%) (m2) Rate (%) (m2) (%) Total - All Grades 2,203,009 9.8% 671,722 8.8% 229,819 4.3% 200,055 14.2% 1,101,413 10.0% A Grade 885,567 10.8% 259,074 6.1% 136,504 4.0% 80,600 0.0% 409,389 18.1% B Grade 563,380 5.0% 202,544 7.6% 78,629 5.1% 31,046 3.4% 251,161 3.0% C D Grade 754,062 12.1% 210,104 13.2% 14,686 2.8% 88,388 31.0% 440,884 5.4%Source: PCA OMR July 2012/ Colliers International Research• The Canberra region once again saw a CANBERRA REGION TOTAL OFFICE MARKET VACANCY RATE decline in the vacancy rate. Total vacancy in the Canberra region dropped further to 16.0% Forecast 9.8% at July 2012, from 10.3% in January 14.0% 2012. The region also recorded a six month 12.0% net absorption of 13,066m2. Vacancy Rate• Vacancy in Barton remained the lowest 10.0% 9.8% of all the major office precincts in the 8.0% 6.4% Canberra region in July 2012 at 4.3%, 6.0% followed by the CBD at 8.8%. 4.0%• Only 15,398m2 of new supply was introduced to the market over the six 2.0% months to July 2012. This is substantially 0.0% lower than the six month 10-year average Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 of 49,769m2.• Vacancy is forecast to increase to 12.7% Total Vacancy Factor 10 Year Historical Average in July 2013 before decreasing to 12.1% in January 2014. This is due to anticipated Source: PCA OMR July 2012/Colliers International Research completion of 16 new and refurbished buildings with an estimated 218,323m2 of space entering the market over the next 18 months and marginal growth in CANBERRA REGION VACANCY BY GRADE white collar employment over the same time period. 40.0% 34.9%• The vacancy rate in the Woden Valley 35.0% precinct increased by 1.0% from January 30.0% Vacancy Rate 2012 to July 2012. This is due to an 24.6% 25.1% increase of 1,337m2 in vacant D Grade 25.0% stock. 20.0%• A Grade vacancy decreased by 1.5% and 15.0% 12.8% 11.7% 12.9% 0.7% in the Civic and Barton precincts over 10.8% 10.7% 10.3% 10.0% 8.4% the first half of 2012 while B Grade vacancy 5.1% 5.0% increased by 2.7% to 7.6% in Civic and 5.0% decreased by 0.2% to 5.1% in Barton. 0.0%• Within the Airport precinct there is currently A Grade B Grade C Grade D Grade 59,818 m2 of vacant space, equivalent to a vacancy rate of 36.0%. If this precinct were Jul-11 Jan-12 Jul-12 removed from analysis the Canberra region would have only 7.62% vacancy overall, Source: PCA OMR July 2012/Colliers International Research below the current vacancy rate of the Sydney CBD COLLIERS INTERNATIONAL | P. 6
  7. 7. RESEARCH FORECAST REPORT | SECOND HALF 2012 | OFFICE | CANBERRA REGION Leasing Market Activity • Average A Grade net face rents decreased • Incentives are likely to remain stable across from $365/m2 pa in January 2012 to both A and B Grade stock over the second $362/m2 pa in July 2012. Average incentives half of 2012. decreased over the six months to July 2012 • A Grade net effective rents are anticipated to range between 9.0% - 10.0% causing to increase 0.6% to July 2013 while B Grade A Grade net effective rents to increase from stock will decrease by 1.3% over the next $324/m2 pa to $326/m2 pa, equivalent to a 12 months. 0.9% increase. • Average B Grade net face rents decreased from $290/m2 pa to $283/m2 pa over the first half of 2012 while average incentives remained stable leading to an increase in net effective rents for B Grade stock to decrease by 1.7% from $243/m2 pa to $239/m2 pa. AVERAGE INCENTIVE RANGE Grade Q4-2011 Q4-2011 Q2-2012 6-month Forecast A Grade 9.5 - 10.5% 9.5 - 10.5% 9.0 - 10.0% Stable10 – 12 Mort Street, Civic15,477m2 of space was let to the Department of B Grade 12.5 - 17.5% 12.5 - 17.5% 12.5 - 17.5% IncreasingEducation, Employment, and Workplace Relations Source: Colliers International Researchin this newly refurbished building. This was thelargest commercial lease started in the six monthsto June 2012 in the Canberra region. CANBERRA OFFICE NET EFFECTIVE RENTS $400 Forecast $350 $328 $329 $335 $317 $324 $326 $315 $300 $241 $239 $239 $236 $247 $244 $250 $237 $200 $150 $100 $50 $0 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 A Grade B Grade Source: PCA OMR July 2012/Colliers International Research COLLIERS INTERNATIONAL | P. 7
  8. 8. RESEARCH FORECAST REPORT | SECOND HALF 2012 | OFFICE | CANBERRA REGION Investment Market Activity • Over the first half of 2012 four office • Approximately 82% of sales volumes came buildings have transacted totalling from foreign purchasers over the first half of $377.8 million well over double the 2012. This is the highest volume of foreign total transactions over the entire 2011 transactions over the past four years. calendar year. • Yields for both A and B Grade assets have • The sale of 50 Marcus Clarke Street was remained stable over the last 12 months the largest sale recorded in the Canberra to July 2012, ranging between 7.25% – region over the past four years. This sale 7.75% for A Grade and 9.25% - 10.50% for represented approximately 49% of total sales B Grade yields. volume for the first half of 2012. • Yields in the Canberra region are forecast • The sale of a 50% stake in the Caroline to continue this trend over the rest of the Chisholm Centre for $83 million was the year to 2013. largest sale of secondary stock over the first six months of 2012. It represented a capital value of $4,125 per square metre and an equivalent reversionary yield of 8.67%. AVERAGE YIELD RANGES Change in Yields Grade Q2 2011 Q4 2011 Q2 2012 since Q2 2011Caroline Chisholm Centre, 57 Athllon Drive,Belconnen A Grade 7.25% - 7.75% 7.25% - 7.75% 7.25% - 7.75% StableThe sale of the Caroline Chisholm Centre was one B Grade 9.00% - 10.00% 9.25%-10.25% 9.25%-10.25% Stableof two major sales over the first half of 2012 to aforeign entity. Foreign investment in the Canberra Source: Colliers International Researchregion has reached $308 million over the sixmonths to June 2012. CANBERRA CBD A GRADE YIELDS 10 9.5 9 8.5 Equivalent Rev. Yield (%) 8 7.5 7 6.5 6 5.5 5 2005 2006 2007 2008 2009 2010 2011 2012 Source: Colliers International Research CANBERRA REGION A GRADE YIELDS 10 9.5 9 8.5 Equivalent Rev. Yield (%) 8 7.5 7 6.5 6 5.5 5 2005 2006 2007 2008 2009 2010 2011 2012 Source: Colliers International Research COLLIERS INTERNATIONAL | P. 8
  9. 9. RESEARCH FORECAST REPORT | SECOND HALF 2012 | OFFICE | CANBERRA REGIONInvestment AnalyticsCAPITAL RETURNS CONTINUE TO GROW CANBERRA CBD TOTAL OFFICE RETURNS• According to IPD Australia’s Property 15.00% Investment Digest, the Canberra CBD experienced marginal positive growth in 10.00% capital and total returns over the March 2012 quarter. 5.00%• Capital returns increased by 0.5% per annum in March 2012, up from -0.9% 0.00% in the December 2011 quarter. Income returns decreased by 0.1% to 9.0% over -5.00% the same time period taking total returns to 8.0% per annum. -10.00%• Annual total returns for Secondary grade -15.00% assets in the Canberra CBD increased over Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 the quarter by 1.6% to March 2012 to 4.2%, while annual total returns for Prime grade Capital Return Income Return assets increased 0.1% to 9.2% over the same period. Source: IPD Australia/Colliers International ResearchFOREIGN INVESTOR DEMAND HIGH CANBERRA REGION INVESTMENT SALES BY BUYER TYPE• Over the past six months approximately 100% 85% of sales volumes have been from 90% foreign purchasers. 33% 80%• The largest purchase over the first half of 70% 2012 by a foreign entity has been the sale 60% of 50 Marcus Clarke Street to CIMB Trust 82% Capital for $225.89 million 50% 100% 100% 40%• While the value of acquisitions by private 56% investors appears to be considerably lower 30% over the last six months, it is only 12.1% 20% below the value of transactions made by the 10% 18% same group over the first six months of 2011. 0% 11% 2009 2010 2011 2012 Institution Private Foreign Government Source: Colliers International Research COLLIERS INTERNATIONAL | P. 9
  10. 10. RESEARCH FORECAST REPORT | SECOND HALF 2012 | OFFICE | CANBERRA REGIONRecent Market Transaction Activity LEASING ACTIVITY Address Suburb Start Date NLA M² Tenant Department of Families, Housing, Community Services and 32 Corinna Street Phillip 7/07/2012 1,710 Indigenous Affairs Canberra House, 40 Marcus Clarke Street CBD 1/05/2012 173 Molonglo Group Pty Ltd Group Of Eight House, 101 Northbourne Avenue Turner 30/09/2012 190 APMG Australasia 18 Lonsdale Street Braddon 278 Unknown Lessee Cooyong Centre, 1-3 Torrens Street Braddon 30/03/2012 204 Dowse Projects Pty Limited 10-12 Mort Street CBD 25/03/2012 15,447 Department of Education, Employment and Workplace RelationsSource: Colliers International Research INVESTMENT SALES ACTIVITY Sale Building Capital Market Address Suburb Sale Price Vendor Purchaser Date* Area Value Yield** Penrhyn House, 2 - 6 Bowes Street Phillip Jun-12 $14,000,000 12,622 1,109 11.05% McGrathNicol Quintessential Equities Pty. Ltd. Caroline Chisholm Centre, Korda Mentha Belconnen Apr-12 $83,000,000 40,244 4,125 8.67% Frasers Commercial Trust 57 Athllon Drive (50% share) CIMB Trust Capital - 50 Marcus Clarke Street CBD Mar-12 $225,000,000 40,201 5,619 7.37% Walker Corporation Australian Office Fund No. 1 10- 12 Mort Street CBD Jun-12 $55,800,000 15,447 3,612 10.19% GPT Group Growthpoint (AUS)Source: Colliers International Research COLLIERS INTERNATIONAL | P. 10
  11. 11. RESEARCH FORECAST REPORT | |SECOND HALF 2012 | OFFICE | CANBERRA REGION SECOND HALF 2012 | OFFICE | CANBERRA REGIONOutlook 522 offices inWith the large amount of supply expected to come online in the next six months (140,704m²), andmore subdued white collar employment growth forecast, vacancy rates in the Canberra region are 62 countries onanticipated to increase, peaking at 12.7% in July 2013 and will then gradually decrease over thefollowing 18 months. 6 continents United States: 147 officesThe vacancy rate is expected to rise significantly for secondary stock but remain stable and Canada: 37 officespotentially decline for A Grade space. As a result, Colliers International forecast that there will be Latin America: 19 officesmarginal increases in A Grade net effective rents over the next two years as tenants move out of Asia Pacific: 201 officessecondary stock. Incentives for the A Grade office market will remain stable during the same time EMEA: 118 officesperiod. Over the short term, secondary grade buildings are anticipated to have stable incentive • $1.5 billion in annual revenuelevels and record a contraction in net effective rents. • 1.2 billion square feet underThe investment market will be slightly more subdued over the second half of 2012 however has managementalready achieved a higher volumes of sales than it has over the past two years combined. It is • Over 12,300 professionalsexpected that leasing activity will remain buoyant as government and private tenants continue theirflight to quality A Grade space. COLLIERS INTERNATIONAL Ground Floor, 21-23 Marcus Clarke Street, Canberra ACT 2600 TEL 02 6257 2121 FAX 02 6257 2937 RESEARCHER Margaret Bowden Analyst/Research TEL 03 9940 7279 FAX 03 9092 1479 Paul Powderly State Chief Executive TEL 02 6257 2121 FAX 02 6257 2937 Colliers International does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must take note that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one way or the other in relation to the accuracy of such information, figures and projections. Colliers International will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information that you rely upon that is contained in the material. COPYRIGHT - Colliers International 2012. Accelerating success. COLLIERS INTERNATIONAL | | P. 11 COLLIERS