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Cushman & Wakefield’s 2023 EOY Market Commentary & 2024 Forecast

Jess Freeman • 18/12/2023

December 2023



Guy Bennett
, Cushman & Wakefield's CRE Managing Director ANZ believes "As we approach 2024, the commercial real estate market is poised for continued growth and transformation. 

"With advancements in technology, a shifting workforce landscape, and evolving consumer preferences, the industry is adapting at a rapid pace.

Mr Bennett knows the future of work is becoming increasingly flexible, with a rising demand for hybrid work models. 

"As a result, office spaces are likely to be redesigned to accommodate collaborative areas, tech-enabled meeting rooms, and coworking spaces. Expect a focus on wellness amenities and sustainable features to attract tenants.

"The demand for industrial spaces, driven by e-commerce and logistics, will remain robust. 

"Warehousing and distribution centres will adapt to accommodate last-mile delivery services, emphasising efficiency and proximity to urban centres. Sustainability initiatives, such as green warehouses and eco-friendly packaging, will gain prominence.

Mr Bennett believes overall, it appears that investors from all sectors will focus on sustainable and socially responsible projects, reflecting the growing importance of environmental and social governance (ESG) factors.

“Additionally, rising interest in data centres and BTR properties will see these sectors continue to move towards the mainstream.

“However, challenges remain, particularly for the office sector. 2023 will likely be the first year of negative office net absorption since the onset of the COVID-19 pandemic in 2020. 

“Even here though, there are pockets of strength, as demand for premium, centrally located offices has remained robust. Brisbane in particular is a market to watch thanks to an uptick in intrastate migration coming into Queensland combined with a relative dearth of short-term supply relative to other state capitals. 

“Although rapidly rising interest rates has led to a degree of caution amongst investors, we expect that a pivot by the RBA in the second half of 2024 will ease credit conditions and support a recovery in the investment market. Traditionally the best time to buy property has been when the central bank begins cutting rates.  

"Despite the positive outlook, challenges such as rising construction costs, supply chain disruptions, and regulatory changes may impact the commercial real estate industry in 2024. Navigating these challenges will require adaptability and strategic planning from industry stakeholders.”

Mr Bennett concluded that the commercial real estate market in 2024 will be defined by flexibility, sustainability, and innovation. "Those who embrace change and invest in cutting-edge solutions are likely to thrive in this dynamic environment.”




Josh Cullen, Cushman & Wakefield's International Director & Head of Capital Markets, Australia and New Zealand said whilst the Australian capital markets office sector faced some strong head winds in 2023, including rising debt costs, the continual debate surrounding ‘work from home’ and competition from other global markets, Q4 showed signs for the tide to turn. 
“Return to office numbers are increasing for each day of the week and companies pushing for a return to work and monitoring bonuses pegged to WFH were all announcements that provide confidence in the sector.
“While transaction activity remained relatively subdued compared to peak periods, Q4 witnessed select campaigns generating robust bidding support—an encouraging departure from the earlier months of 2023. The market is witnessing a gradual transition, with capital increasingly seeking opportunities in targeted markets. 

“Notably, the gap between vendor and buyer expectations is narrowing, setting the stage for a more dynamic landscape. This convergence is anticipated to result in increased transactions and tangible evidence of market activity, with projections pointing towards a noteworthy uptick by Q2 2024.”


Daniel Cullinane, Cushman & Wakefield's Head of National Investment Sales said the national team are continuing to experience heightened demand from domestic private investors who are seeking to secure alternate or additional income streams. "They are attracted to the income security that is provided by blue chip lease covenants and the long-term economic indicators underpinning asset classes such as Childcare, Medical, Fast Food and Convenience Retail. 

"We are seeing some deviation from recent highs in terms of pricing resultant of recent interest rate movements and an increase in risk free return options available to investors. In most sectors, we have seen yield reversion in an attempt for investors to achieve a risk premium over and above risk-free options available in the market. 

"We are seeing a high level of demand for fast food assets with many assets that offer strong fundamentals achieving sub 5.0% yields. We are expecting the convenience retail REITS to re-enter the market in 2024 once pricing stability can be achieved and forward-looking interest rate projections can be viewed with some more confidence.



Tim Molchanoff, Cushman & Wakefield’s Head of Office Leasing Australia and New Zealand said the Australian office market continues to demonstrate resilience and adaptability as ongoing changes are presented as a result of the pandemic and shifting work patterns. 

“With a gradual bounce-back in the economy, we've observed a strong uptick in demand for office spaces, across Brisbane and Perth. Sydney and Melbourne have presented a two-speed market with solid demand and enquiry for central core CBD locations, while fringe CBD and Metro markets are seeing increasing vacancy.

“As has been the case over the last few years, the flight to quality in not only the actual workspace but better amenity in and around the building continues, however, it is becoming much more directed to the premium grade markets across the country. Australian CBD markets have just ticked over 3 million sqm of occupied premium grade space for the first time, with Melbourne and Sydney accounting for over two thirds of total occupied premium space. 

“Businesses continue to embrace a hybrid model of working, which is leading to innovative uses and designs of office space. The market continues to adapt with more flexible lease arrangements becoming commonplace, reflecting a shift in the tenant-landlord paradigm. It's clear, the Australian office market has evolved considerably in the past year, setting the stage for intriguing developments in the coming months.”


Mitch Wilson
, Cushman & Wakefield’s Head of Project & Development Services, ANZ said looking back over the landscape of Project Development Services (PDS) and the commercial property market in Australia, a resounding theme was present in 2023 - the imperative of diversification across market sectors.

“Recognising the paramount importance of adaptability and in a world marked by rapid changes and unforeseen challenges, the ability to pivot and navigate through different market conditions has been a strategic asset for our clients, as well as our own team.

“Undoubtedly, the past year has witnessed its share of volatility. Rather than viewing this as an obstacle, Cushman & Wakefield’s PDS team sees it as an invaluable opportunity for growth through efficiency. 

“Key sectors to watch in 2024 will include Data Centres and the critical role they play in the digital era; Industrial spaces, which are integral to the supply chain and logistics landscape; and Renewables, namely Australia’s environmental responsibility and future-focused business practices, which not only present compelling business prospects but also mirror Cushman & Wakefield’s commitment to sustainable and forward-looking practices for our clients.


According to Paul Huggins, Cushman & Wakefield’s Managing Director, New Zealand, "In the evolving landscape of the New Zealand Property Market, a resilient rebound is anticipated after a relatively flat 2023. The positive surge in investment intent is poised to emerge in late FY24, riding on the alleviation of inflation pressures. With growing confidence, the prospect of transformative investments and changes looms ahead. 

"We hope to see more activity in both local and government sectors with large Facility Management contracts coming to the market in the next 24 months as organisations try to streamline and make efficiencies
Although the real estate market may take time to gather momentum, we are destined to witness a persistent trend of companies reimagining their spaces to meet the evolving expectations of Hybrid working, thereby delivering an enriched workplace experience."


According to Matt Clifford, Cushman & Wakefield’s Head of Sustainability & ESG Asia Pacific, 2023 has been a pivotal year for ESG with naysayers proven wrong – “ESG has continued to grow in importance, particularly under challenging market conditions.  It has also become a critical decision point in most deals, with various cases of investors walking away from deals that don’t meet their rising ESG standards. 

“In 2023 we’ve seen widespread adoption and integration of climate risk assessments into the real estate life cycle, particularly investment due diligence.  This relatively niche topic has become a must-do step for any savvy investor looking to understand and mitigate their potential climate risks. The great news though is technology has made this quick and easy, allowing rapid decision-making to take place, based on highly credible and detailed data. 

“A challenge across APAC is the ongoing lack of supply for renewable energy, particularly for intensive sectors like Data Centres, or in certain regulated markets.  We’ve seen real estate groups resort to a range of creative solutions and commercial mechanisms to bring new renewable energy supply to their assets, with real estate owners continuing to drive the energy market to adapt and move faster to meet their decarbonization needs. 

According to Gehan Palipana, Cushman & Wakefield’s Head of Sustainability, ANZ, “We’re seeing continuing consolidation of sustainability standards internationally, which is starting to be reflected in local and regional legislation. The IFRS S1 and S2 recommendations regarding mandatory climate and environmental disclosures are making their way through Australia’s legislative channels at the moment and we are expecting to see indications around who, how and what needs to be disclosed early in 2024. Key disclosure requirements will be an increase focus on scope 1, 2 and 3 emissions reporting and climate risk assessments both at the physical asset and organisational level. 

He went on to say “Both federal and state governments in Australia are rolling out policy commitments around net zero, circularity and procurement in 2024. We are expecting these policies to translate into a significant uplift in minimum expectations around building performance, resource efficiency and the upstream and downstream impacts of procurement activity. Growing emphasis will be placed on the embodied carbon emissions of construction and refurbishment activity as well as the downstream impacts of the goods and services building occupants procure”.


Melbourne Capital Markets

Nick Rathgeber
, Cushman & Wakefield’s International Director, Capital Markets Australia & New Zealand said due to uncertainty regarding buy-side liquidity, 2023 in Melbourne was characterised by low stock levels and subsequent transaction volumes. “Vendors were cautious to select assets that they were confident would be met with appropriate liquidity, which produced a relatively high conversion rate. 1 Nicholson Street, East Melbourne was one such example, resulting in a successful sale for $155 million.

“A combination of increased leasing activity, improving investor sentiment and December book valuations are expected to reduce the bid-ask spreads for office buildings going into 2024 and facilitate a higher volume of sale activity in Melbourne. The origin of active offshore capital is predominantly from Singapore, Japan and Germany, with domestic private investors continuing to capitalise on opportunities whilst major domestic managers are net sellers.”

Melbourne Investment Market

The pulse of Melbourne's commercial investment sales sector stands out as a key player in shaping the city's real estate landscape. Year to date (until Nov 2023) has seen a noteworthy trend with 10 Middle Markets assets transacting in the CBD, amassing an impressive sales volume exceeding $250 million. A comparative glance at the same period in 2022 reveals a marginal increase in transaction numbers, but a substantial leap in sales volume, surpassing $560 million.

Daniel Wolman, Cushman & Wakefield’s International Director of Investment Sales in Victoria, said “Looking forward to 2024, pivotal factors likely to influence the market include the economic landscape, regulatory changes, government policies, and the delicate balance of supply and demand. As the market evolves, monitoring key economic indicators such as GDP growth, employment rates, and business sentiment becomes crucial for gauging its health in the coming year.

Mr Wolman went on to say a distinctive aspect of the Middle Markets campaigns in Melbourne's CBD is the notable interest they have garnered from investors. Cushman & Wakefield's campaigns have seen buyers with a mix of local and offshore origins, underlining the city's appeal as a global investment destination. The nuances of these campaigns, marked by diverse investor profiles, reflect the resilient nature of Melbourne's commercial property market.

“The coming year is poised to be shaped by a delicate interplay of economic indicators such as regulatory changes and government policies, as well as investor sentiments. As Melbourne's commercial investment sales sector navigates these factors, the market's resilience will be tested, and opportunities will emerge for those keenly attuned to the evolving dynamics of this vibrant city. The balance between supply and demand for secure investment opportunities will undoubtedly be a linchpin, influencing property values and steering investment activities in the Melbourne commercial arena”. 

Melbourne Industrial

According to David Norman, Cushman & Wakefield’s Director and Head of Industrial Sales & Leasing, Victoria “Melbourne’s West remains one of the most active leasing markets in the country, supported by structural tailwinds, land availability and access to the Port of Melbourne and arterial road networks. This theme will continue in 2024 as there is a large pipeline of pre-commitment and speculative development activity that will continue to grow the market’s size. 
“The active development market will likely place some upward pressure on vacancy rates; however, Melbourne’s West is coming off a low base at 1.6%, and current occupier requirements total in excess of 315,000 sqm, which will ensure vacancy rates remain well below historical averages”. 

Melbourne Office Leasing

According to Chas Keogh, Cushman & Wakefield’s National Director, Joint Head of Department, Office Leasing Victoria, the Melbourne Office Leasing sector has remained buoyant despite suggestions otherwise, as Melbourne now has over 1 million square metres of occupied premium stock for the first time.

“There are two pivotal truths set to unfold in 2024. Firstly, the essence of transactions lies in fitted spaces, with 85% of all deals concluded by Cushman & Wakefield being for fitted space (circa 150 by year-end) including both spec and existing fitouts. If it isn’t sky rise A or premium grade that percentage will be above 90%

“Secondly, the divergent nature of the market means assets, where owners are investing, are delivering results, those that aren’t committing capital to meet the needs of occupiers are struggling to secure new tenants and retain existing ones” 

Melbourne Retail Leasing

According to Michael DiCarlo, Director of Retail Leasing at Cushman & Wakefield, his team have navigated the challenges brought about by the pandemic, with rents and incentives remaining stable over the past 12 months despite the economic downturn. 

“While general merchandise retailing has experienced a slowdown, the hospitality sector, including restaurants, cafes, and takeaways, are seizing the opportunity presented by increased pedestrian traffic.

“A notable resurgence is observed along Swanston Street, attributed to the completion of the new Underground rail, scheduled to open next year. The improved infrastructure promises to inject vitality into the area, creating new opportunities for retailers and enhancing the overall urban experience.

“In response to the evolving dynamics of the city, Melbourne's cafés and restaurants have adapted their trading patterns. The period between 2019 and 2022 witnessed a shift, with a higher percentage of businesses opting to open on weekends, prominently on Sundays. Conversely, fewer establishments have chosen to operate on Mondays and Tuesdays. Notably, Tuesday has emerged as a key trading day, catering to the commuting crowd in 2023.

Mr DiCarlo expressed optimism about the future of retail in Melbourne, stating, "As we navigate the evolving landscape, we see resilience and adaptability within the retail sector. The completion of the new Underground rail and changing trading patterns reflect the dynamic nature of Melbourne's CBD, and we are excited to contribute to the continued growth and success of the retail community."




Sydney Middle Markets/ Investment Sales

According to Jack Harrison, Cushman & Wakefield’s Associate Director Capital Markets, ANZ “Whilst rising interest rates and a withdrawal/re-allocation of capital from the office sector kept sales volumes relatively subdued across the country, Sydney’s metropolitan markets saw a number of transactions completed across 2023. The cap-rate spread between vendors and potential purchasers continues to shrink in the metropolitan markets as valuations continue to be wound back. This coupled with a willingness from institutional owners to dispose of non-core assets has ensured that a reasonable level of activity continued throughout the year. 

“One of the biggest challenges facing buyers in 2023 along with the continued rise in the cost of debt, was the ability to raise capital for office investments. This meant that more so than usual, the liquid price point of sub $150m was a more achievable and palatable investment prospect for purchasers. 

“Whilst we expect a stabilisation of debt markets in 2024, access to capital for office may remain somewhat subdued in H1 2024 as investors elect to take a ‘watch and wait’ approach. However, we fully expect metropolitan transaction volumes to increase as institutional landlords continue to dispose of non-core metropolitan assets to free up capital and or fund burgeoning development pipelines.”

Sydney CBD Office Leasing

Andy Cox
, Cushman & Wakefield’s National Director, NSW Head of Office Leasing said 2023 has seen mixed results for Sydney CBD Office Leasing market. 

“The overall level of tenant demand has been relatively strong, and consistent with 2022, however, there has been a high level of hesitancy with concerns over workplace strategy, the evolving business landscape, and uncertain economic conditions both nationally and globally. This has put pressure on decision making and ultimately lead to a reduction in transactions – particularly relocations. 

“Positively, there are several market fundamentals that have remained strong and make for an optimistic outlook for 2024. Tenant demand, rental growth, increased occupancy rates, and a shortage of Premium Grade supply across 2025-2027 are encouraging signs for transactional activity to increase. We believe buildings that are proactive in their capex and leasing strategies will benefit from this over the next 18 months.”



Brisbane Commercial Sales

According to Andrew Gard and Michael Gard, Cushman & Wakefield’s Directors of Brisbane Commercial Sales, the market landscape in 2023 remained challenging as seen by significantly reduction transaction volumes. 

“The ongoing scarcity of builders, exacerbated by numerous construction corporate collapses and an unprecedented government infrastructure pipeline absorbing the attention of the construction sector continues to pose challenges for developers to deliver large-scale projects. 

“Simultaneously, construction costs have remained elevated and efficiencies have reduced causing construction timeframes to increase. Interest rates have continued to rise as a measure to combat inflation, and the wide economic expectation is that they will remain elevated for longer than what was previously anticipated in order to eliminate embedded inflation. 

“Despite these challenges, buyer sentiment remains robust for well-located commercial assets that require limited building works to achieve occupancy or leasing outcomes. 

Michael Gard said, “Commercial assets with quality fundamentals are still seeing strong demand, highlighted by our unconditional transaction at 96 Warren Street, Fortitude Valley where generous car parking, large floor plates and the land-rich nature of the property equated to strong buyer competition.” 

In regard to the development site market, Andrew Gard said “While there are some issues plaguing the development site space, the market has seen substantial rent and price growth for apartments, with sites in high-demand lifestyle locations experiencing unprecedented growth and are proving to be significantly rewarding for those developers who have the ability to build in the current environment. These factors are translating to demand for quality sites with scope to being able achieve generous revenues.” 

Brisbane Middle Markets 

Mike Walsh
, Cushman & Wakefield’s Director and Joint Head of Middle Markets, QLD said 2023 can be characterised as a year of swift recalibration as the market felt the impact of multiple & consistent cash rate rises, compounded by further geopolitical and global macro headwinds.

“On the buy side in Queensland, private investors truly stamped their mark across all price points from $5m right up to $300m as the listed market generally focussed on reweighting their portfolios to either fund redemptions, reduce gearing or exposure to certain asset classes.

“We anticipate much of the same in the early part of 2024 until we get comfort around where the cash rate may land and inflation tempers. Undoubtedly this volatility will continue to provide opportunities for those with capital that can move quickly to secure assets below replacement cost and historical benchmark pricing indicators.”


Queensland Industrial

Morgan Ruig, Cushman & Wakefield’s Director of Industrial Brokerage, Queensland, said the Queensland market has continued to experience extremely strong rental growth. “The Queensland industrial brokerage market has continued to hold strong with recording breaking leasing and occupier sales results despite the drop off on pure investment front. We expect this to continue in the New Year given the strength in the occupier markets and limited supply of both land and vacant buildings in the core industrial areas"


Brisbane Office Leasing

According to Billy Miller, Cushman & Wakefield’s Head of Brisbane Office Leasing, the Brisbane office market has displayed some of the strongest fundamentals in the country, with very robust rental growth over 2023.
“Brisbane is in a favourable position in contrast to its southern counterparts on the east coast. While Sydney and Melbourne recorded negative net absorption in excess of 40,000 sqm between January and July, Brisbane saw positive net absorption of 30,000 sqm. Brisbane also has no new supply coming to the CBD in 2023 and only one new building in the fringe at 895 Ann, which is already fully committed. 205 North Quay should finish in Q4 of next year, but again it is already pre-committed.”
“These tight supply conditions are driving vacancy down, which is supporting strong rental growth. This growth was 19.7% in the 12 months to Q3 2023 on a prime net effective basis, which is very high. This is also supported by the continued flight to quality trend, specifically in the premium grade where net effective rental growth is even higher. With only six standing premium assets in Brisbane, high demand and limited supply is seeing rents in these buildings jump at rapid rates.”
“Outgoings are creeping up slightly, but incentive levels are beginning to compress, especially in prime CBD assets. This is helping push the already strong rental growth we are seeing across Brisbane.”
“Looking to next year, we expect that much of this rental growth will continue. There is just no space anywhere at the moment, especially contiguous floors and with much of the limited future supply already committed it’s hard to see rental growth slowing down too much.”




Perth Capital Markets

Nick Charlton, Cushman & Wakefield's Director and Joint Head of Capital Markets, WA highlighted the subdued nature of the Perth office market, marking it as one of the quietest periods in the past decade. 

“The market has witnessed minimal transactions, and 2023 has been characterised by a notable number of withdrawn campaigns. Only two assets in the CBD have changed hands, amounting to just over $50 million in total”.
Mr Charlton noted that the focus of investors has shifted towards the eastern states markets, driven by the pursuit of clarity on capitalisation rates, commenting “Despite reasonable activity levels in the metro markets space, there has been a gradual decline in investor capability to raise capital as the year progressed.
Looking ahead to 2024, Mr Charlton anticipates limited transactions in the first half of the year. He suggests that once there is a regularity of transactions in Sydney, there will likely be stronger interest in the Perth market. 

“This increased interest is expected, especially considering the robust leasing market in Perth, which has witnessed positive net absorption for 10 consecutive quarters.”
Furthermore, he foresees capital flowing into Perth, primarily from interstate, and predicts an uptick in acquisitions from South East Asia; “This trend is attributed to developers and investors being increasingly deterred by certain taxation regimes implemented in some states. 

“We are seeing a number of these investors in WA who are looking for stronger fundamentals on potential price growth and demand. WA has been viewed as an attractive proposition due to this and our population growing at even greater levels than witnessed during the mining boom”

Mr Charlton highlighted the growing demand for Purpose-Built Student Accommodation (PBSA), particularly with the proximity of ECU's delivery by the end of 2025, set to open in 2026. Additionally, he noted that retail, especially neighbourhood shopping centres, remains popular among investors. “Looking forward, there is an expectation of increased efforts by owners to dispose of office space in the coming year, driven by the impact of rising rates and redemptions”.

Perth Industrial

Nick Goodridge, Cushman & Wakefield’s National Director Head of Industrial & Logistics - WA, said Perth's industrial property market has witnessed sustained growth throughout 2023, driven by an imbalance between tenant demand and available supply. 

“We've seen significant rental growth due to this demand-supply mismatch, pushing vacancy rates to historic lows. Prime rents have surged by an impressive 17.9% within the last 12 months, greatly surpassing the long-term average of 3.2% per annum. This growth trend is anticipated to persist into 2024, particularly within core markets, which will be supported by the record low vacancy environment and strong levels of demand across core markets. 

"Occupier demand has remained remarkably robust despite facing global challenges. Notably, the 4,000 – 6,000 sqm GBA (Gross Building Area) range has hosted the most substantial pool of occupiers, with annual take up surpassing the 10-year average."

Mr Goodridge went on to say that transport and logistics have been the most active sectors, buoyed by e-commerce trends. Additionally, manufacturing has displayed resilience, bolstered by government stimulus and the strength of the booming resources sector."

"Within the capital markets sector, transactional activity has been limited, leading to price discovery challenges. Yields have softened in response to elevated funding costs, resulting in divergent bid-ask spreads. However, assets with short WALE’s and offering the potential for development or rental upside will continue to draw in the active capital's focus."

Perth Office Leasing

According to Mark Clapham, Cushman & Wakefield's Joint Managing Director, WA “The Perth office market remains steady, generally reflecting a resilient market. 

“Tenant inquiries for office continue to grow. The buoyancy continues to be fuelled by robust commodity prices, providing a solid foundation for the Western Australian economy. WA is poised for a counter-cyclical performance, should other major economies such as the USA, Western Europe, and Australia's East Coast continue toward a recessionary trend in the forthcoming year.

“In a noteworthy development, there are promising signs of a turnaround in the Perth CBD office leasing pre-commitment market. Glimmers of optimism emerge as a select number of office pre-commitments have been officially recorded, namely in premium and prime CBD locations during 2023. Key transactions include Argonaut at Brookfield, CBUS's 9 The Esplanade, and South 32 securing 6,255sqm at ISPT's redevelopment of the Future Floor at 100 St Georges Terrace.

“However, beyond the CBD, challenges persist in Fringe and Metropolitan locations as developers grapple with the existing mismatch between development economic rents and the rents the market is prepared to pay.”

According to Roly Egerton-Warburton, Cushman & Wakefield’s Director, Head of Leasing, WA “2023 has been a very strong year for Perth commercial property. Perth office occupancy is leading the country at 91%.
“The WA economy has shown resilience to increased rates and market turbulence and has continued to drive tenant demand through the CBD and suburban markets.
“Premium Grade assets, and High A Grade have been the beneficiaries, as major engineering firms such as AECOM, Jacobs, WSP, Linkforce and Calibre upgrade to central, prime grade assets to attract the best staff, in a labour market that remains extremely tight.
“The Lithium, renewables and critical minerals sector continues to boom, and the State and Federal governments have had high activity, committing to new several new deals in the CBD, with more to come next year.
“Speculative fit outs dominated the <500 sqm landscape again, with a rapid uptake of stock early in 2023, and Net Rents have shown impressive increases with continued downward pressure on incentives which is likely to continue through 2024.”

Perth Tenant Advisory

2023 has seen the market soften marginally with limited good quality, fitted office space available in the Perth CBD. As noted by Sonia Dissanaike, Director of Tenant Advisory Group ANZ at Cushman & Wakefield, tenants are coming to market much earlier with increased competition on multi-floor tranches of space for the 2,000+ sqm occupiers. 

“A noteworthy aspect is the impact on leases executed between 2015-2018, which have surpassed market rates and those occupiers are feeling the impact on their lease obligations. There is now an opportunity for owners to reset, retain and renew these occupiers which will relieve the pressure on the tenant but also secure a longer Weighted Average Lease Expiry (WALE) for the owner.

“The market is exhibiting a dual-speed dynamic, distinguishing between assets that have invested in refurbishment and added amenities, and those that have not. The former category is witnessing heightened competition, leaving the latter vacant for extended periods. Assets that have consistently undergone refurbishment and upgrade programs over the last decade are reaping the rewards and enjoying increased demand.

“Conversely, owners of properties that may have neglected refurbishment, possibly due to single occupancy or limited vacancy, are now grappling with prolonged vacancy. These owners are urged to expedite improvements to capitalise on available opportunities in the market. The current landscape underscores the importance of strategic asset management, with a focus on enhancements to attract and retain tenants in a competitive market environment.”


Adelaide Capital Markets

According to Jed Harley, Cushman & Wakefield’s Director Capital Markets SA, the Adelaide market grappled with uncertainty in 2023, particularly concerning interest rates and inflation, resulting in reduced transaction volumes across office, retail, and land sectors.
"Investment yields softened in response to rising interest rates. However, resilient sectors like long-leased retail and medical assets weathered the storm better than others. Capital sources adopted a 'wait and watch' approach. Book values generally remained above the market, and limited transaction evidence made meaningful adjustments challenging for valuers.
“We anticipate a surge in stock in 2024, driven by increased certainty on interest rates and a slowing inflation trend. Passively leased retail, medical, and high-quality suburban offices will remain popular. Properties offering value-add opportunities through leasing strategies, further development, or repositioning will also be sought after.
"We expect local private buyers to dominate metro markets, with many cashed-up investors awaiting the right opportunities. Anticipate increased activity from local syndicates and club-style investors, as a projected easing of the cost of debt is expected in the latter half of the year." 


Adelaide Office Leasing

Adam Hartley
, Cushman & Wakefield’s Director & Head of Office Leasing – SA said in 2023, the commercial real estate landscape unfolded with a rich variety of diverse leasing transactions. “The enduring repercussions of the pandemic persisted, steering numerous tenants towards a decisive path for their long-term office solutions. Notably, a prevailing trend emerged, emphasising a strategic focus on fitted accommodation and flexible lease terms as a prudent approach to mitigating tenant risk.

“Within the sub-500sqm segment, transactions were notably characterized by a substantial preference for spec suites or existing fitout options, facilitating swift and cost-efficient relocations. The larger leasing trend has continued to focus on relocation to higher quality office building that provide better quality amenities and green credentials to encourage staff back to the office

“Looking forward to 2024, the outlook signals a positive trajectory, building upon the foundation laid in 2023. Companies project a more optimistic stance, prompting an anticipated flight to quality across both A and B grade buildings. Proactive property owners investing in the enhancement of buildings, encompassing both amenity and presentation, stand poised to reap substantial benefits by attracting discerning tenants.

“Based on forecasted hold on interest rates, business confidence should improve and companies that have been hesitant to take up new or longer-term lease agreements are likely to reactivate their office relocation.
In alignment with the prevailing trend, the sub-500sqm market is foreseen to maintain its emphasis on fitted accommodation in 2024, underscoring a continued demand for tailored spaces that offer flexibility to occupiers.”

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