retail
AUSTRALIAN COMMERCIAL PROPERTY
Are we moving to a landlord’s market?
1
OFFICE 2
2013 In Two Charts CBD Office Net Effective Rents, Dec 2012 - Dec 2013 -10.0%
-5.0%
Sydney CBD
Melbourne CBD
Brisbane CBD
Perth CBD
Adelaide CBD
Canberra
0.0%
5.0%
$14 $12 $10 $AUD Billions
-15.0%
CBD Office Transaction Volumes, 2007-2013
$8 $6 $4 $2 $0
2007
2008
2009
2010
2011
2012
2013
Australian Institution
Offshore (inc. Privates)
Syndicators
Private Investors
Other
Source: Colliers International Research
Source: Colliers International, RCA
3
Global Economic Growth – Back To Positive 12
US
Japan
Euro area
China
Asia & Australasia (excl Japan)
10
% Growth
8
6
4
2
0
2009
2010
2011
2012
2013
2014
-2
-4 Source: EIU
4
Consumer Sentiment Positive… But Business Confidence Remains Sluggish Index of Consumer Sentiment 130
120
Index
110
100
90
80
70 Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Consumer Sentiment Index
Jan-11
Jan-12
Jan-13
Jan-14
10-year Average
Source: Westpac-Melbourne Institute/Colliers International
5
National Office Leasing Market Historical Enquiry Levels 700,000
600,000 500,000 400,000 2012 2013
300,000 200,000 100,000 0
ACT
NSW
QLD
Total 2012 = 1,289,418sq m
SA
VIC
WA
Total 2013 = 1,576,111sq m 6
Source: PCA / Colliers International Research
Sydney
Melbourne Brisbane Adelaide
Jan-17
Jul-16
Jan-16
Jul-15
Jan-15
16%
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Vacancy Rate
Vacancy Rate Forecasts Total Market CBD Office Vacancy Rate Forecast
14%
12%
10%
8%
6%
4%
2%
0%
Perth 7
CBD Office | Capital City, A Grade Forecast Growth And Major Drivers Net Effective Rents -15.0%
-10.0%
Tenant Demand Drivers -5.0%
0.0%
5.0%
Macro-Economic
Employment Growth (requirements) Company Profits (affordability) Business Sentiment (willingness)
Sydney CBD
Melbourne CBD
Micro-Economic
“Shuffling” of tenants CBD/Metro preferences Upgrading Consolidation New development Backfill New land release
Brisbane CBD
Perth CBD
Adelaide CBD
Structural
Canberra 2012-2013 Source: Colliers International Research
2013-2014
Activity based working Teleworking Sustainability 8
Metro Office Vacancy Rate Forecasts 14.0%
12.0%
Sep-12
Sep-13
Sep-14
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Sydney Metro
Source: Colliers International Research
Melbourne Metro
Brisbane Metro
Adelaide Fringe
9
Metro Office | Capital City Growth And Major Drivers Net Effective Rents
Tenant Demand Drivers Macro-Economic
Employment Growth (requirements) Company Profits (affordability) Business Sentiment (willingness)
Adelaide
Micro-Economic
Brisbane 2012-2013 2011-2012 Melbourne
Structural
Sydney
-10.0%
“Shuffling” of tenants CBD/Metro preferences Upgrading Consolidation New development Backfill New land release
-5.0%
Source: Colliers International Research
0.0%
5.0%
10.0%
Activity based working Teleworking Sustainability 10
INDUSTRIAL 11
Gross State Product Growth (%) 8.0% New South Wales Victoria
7.0%
Queensland South Australia Western Australia
6.0%
Australian Capital Territory
% Growth
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2009
2010
Source: Deloitte Access Economics
2011
2012
2013
2014
2015 12
Industrial Facilities – Under Construction 140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Sydney
Melbourne
Brisbane
Perth
Adelaide
Source: Colliers International Research 13
Prime Industrial Yield Compression 2007-2013
Sydney
Melbourne
Brisbane
Adelaide
Sep-13
Mar-13
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
7%
Mar-09
8%
Sep-08
Average Yield
9%
Perth
Source: Colliers International 14
Industrial Forecast Growth and Major Drivers Prime Net Effective Rents -2.00% -1.00% 0.00%
1.00%
Tenant Demand Drivers
2.00%
3.00%
4.00%
5.00%
6.00%
Macro-Economic Economic growth Retail trade growth Industrial production Population growth
Sydney
Melbourne
Micro-Economic
Brisbane
Consolidation Upgrading Sectoral change
Adelaide
Structural
Perth
2012-2013
2013-2014
Infrastructure improvement (road/rail/air) Online retail 3D printing Rising wages in Asia
Source: Colliers International Research 15
RETAIL 16
Retail & Consumer Drivers Consumer Sentiment Index of Consumer Sentiment 130
120
Index
110
100
90
80
70 Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Consumer Sentiment Index
Jan-11
Jan-12
Jan-13
Jan-14
10-year Average
Source: Westpac-Melbourne Institute/Colliers International 17
Occupancy Metrics Pressure on retailer profitability catching-up with landlords;
Weak re-leasing spreads to continue; Incentives an increasingly important dynamic; New lease structures emerging – flexibility for retailers;
Leasing market challenging in the short-term
18
But some brightness on the horizon Retail trade improving;
Discretionary spending improving; Housing market improving, albeit in only some states; Consumer sentiment now showing more optimists than pessimists
Better conditions expected as we move further into 2014
19
Retail Vacancy Rates Retail Vacancy Rates 2H 2013 Bulky Goods
Neighbourhood
Sub-Regional
Regional
Prime CBD Mall
0%
1%
Source: Colliers International
2%
3% 2H 2013
4%
5%
6%
7%
8%
1H 2013
20
RETAIL
Forecast Growth and Major Drivers Face Rents, Rental Growth
Tenant Demand Drivers Macro-Economic
Retail trade Population growth Consumer Sentiment Retail price inflation Strong AUD Input cost pressures
Bulky Goods
Neighbourhood
Sub-Regional
Micro-Economic
Regional
Competition Local population growth (trade area)
CBD Retail
Structural
-3.0%
-2.0%
-1.0% 2014
0.0% 2013
1.0%
2.0%
Online retailing Retail without borders Increase in international retailers Household saving patterns Road networks
Are we moving to a landlord’s market?
1
OFFICE 2
2013 In Two Charts CBD Office Net Effective Rents, Dec 2012 - Dec 2013 -10.0%
-5.0%
Sydney CBD
Melbourne CBD
Brisbane CBD
Perth CBD
Adelaide CBD
Canberra
0.0%
5.0%
$14 $12 $10 $AUD Billions
-15.0%
CBD Office Transaction Volumes, 2007-2013
$8 $6 $4 $2 $0
2007
2008
2009
2010
2011
2012
2013
Australian Institution
Offshore (inc. Privates)
Syndicators
Private Investors
Other
Source: Colliers International Research
Source: Colliers International, RCA
3
Global Economic Growth – Back To Positive 12
US
Japan
Euro area
China
Asia & Australasia (excl Japan)
10
% Growth
8
6
4
2
0
2009
2010
2011
2012
2013
2014
-2
-4 Source: EIU
4
Consumer Sentiment Positive… But Business Confidence Remains Sluggish Index of Consumer Sentiment 130
120
Index
110
100
90
80
70 Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Consumer Sentiment Index
Jan-11
Jan-12
Jan-13
Jan-14
10-year Average
Source: Westpac-Melbourne Institute/Colliers International
5
National Office Leasing Market Historical Enquiry Levels 700,000
600,000 500,000 400,000 2012 2013
300,000 200,000 100,000 0
ACT
NSW
QLD
Total 2012 = 1,289,418sq m
SA
VIC
WA
Total 2013 = 1,576,111sq m 6
Source: PCA / Colliers International Research
Sydney
Melbourne Brisbane Adelaide
Jan-17
Jul-16
Jan-16
Jul-15
Jan-15
16%
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Vacancy Rate
Vacancy Rate Forecasts Total Market CBD Office Vacancy Rate Forecast
14%
12%
10%
8%
6%
4%
2%
0%
Perth 7
CBD Office | Capital City, A Grade Forecast Growth And Major Drivers Net Effective Rents -15.0%
-10.0%
Tenant Demand Drivers -5.0%
0.0%
5.0%
Macro-Economic
Employment Growth (requirements) Company Profits (affordability) Business Sentiment (willingness)
Sydney CBD
Melbourne CBD
Micro-Economic
“Shuffling” of tenants CBD/Metro preferences Upgrading Consolidation New development Backfill New land release
Brisbane CBD
Perth CBD
Adelaide CBD
Structural
Canberra 2012-2013 Source: Colliers International Research
2013-2014
Activity based working Teleworking Sustainability 8
Metro Office Vacancy Rate Forecasts 14.0%
12.0%
Sep-12
Sep-13
Sep-14
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Sydney Metro
Source: Colliers International Research
Melbourne Metro
Brisbane Metro
Adelaide Fringe
9
Metro Office | Capital City Growth And Major Drivers Net Effective Rents
Tenant Demand Drivers Macro-Economic
Employment Growth (requirements) Company Profits (affordability) Business Sentiment (willingness)
Adelaide
Micro-Economic
Brisbane 2012-2013 2011-2012 Melbourne
Structural
Sydney
-10.0%
“Shuffling” of tenants CBD/Metro preferences Upgrading Consolidation New development Backfill New land release
-5.0%
Source: Colliers International Research
0.0%
5.0%
10.0%
Activity based working Teleworking Sustainability 10
INDUSTRIAL 11
Gross State Product Growth (%) 8.0% New South Wales Victoria
7.0%
Queensland South Australia Western Australia
6.0%
Australian Capital Territory
% Growth
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2009
2010
Source: Deloitte Access Economics
2011
2012
2013
2014
2015 12
Industrial Facilities – Under Construction 140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Sydney
Melbourne
Brisbane
Perth
Adelaide
Source: Colliers International Research 13
Prime Industrial Yield Compression 2007-2013
Sydney
Melbourne
Brisbane
Adelaide
Sep-13
Mar-13
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
7%
Mar-09
8%
Sep-08
Average Yield
9%
Perth
Source: Colliers International 14
Industrial Forecast Growth and Major Drivers Prime Net Effective Rents -2.00% -1.00% 0.00%
1.00%
Tenant Demand Drivers
2.00%
3.00%
4.00%
5.00%
6.00%
Macro-Economic Economic growth Retail trade growth Industrial production Population growth
Sydney
Melbourne
Micro-Economic
Brisbane
Consolidation Upgrading Sectoral change
Adelaide
Structural
Perth
2012-2013
2013-2014
Infrastructure improvement (road/rail/air) Online retail 3D printing Rising wages in Asia
Source: Colliers International Research 15
RETAIL 16
Retail & Consumer Drivers Consumer Sentiment Index of Consumer Sentiment 130
120
Index
110
100
90
80
70 Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Consumer Sentiment Index
Jan-11
Jan-12
Jan-13
Jan-14
10-year Average
Source: Westpac-Melbourne Institute/Colliers International 17
Occupancy Metrics Pressure on retailer profitability catching-up with landlords;
Weak re-leasing spreads to continue; Incentives an increasingly important dynamic; New lease structures emerging – flexibility for retailers;
Leasing market challenging in the short-term
18
But some brightness on the horizon Retail trade improving;
Discretionary spending improving; Housing market improving, albeit in only some states; Consumer sentiment now showing more optimists than pessimists
Better conditions expected as we move further into 2014
19
Retail Vacancy Rates Retail Vacancy Rates 2H 2013 Bulky Goods
Neighbourhood
Sub-Regional
Regional
Prime CBD Mall
0%
1%
Source: Colliers International
2%
3% 2H 2013
4%
5%
6%
7%
8%
1H 2013
20
RETAIL
Forecast Growth and Major Drivers Face Rents, Rental Growth
Tenant Demand Drivers Macro-Economic
Retail trade Population growth Consumer Sentiment Retail price inflation Strong AUD Input cost pressures
Bulky Goods
Neighbourhood
Sub-Regional
Micro-Economic
Regional
Competition Local population growth (trade area)
CBD Retail
Structural
-3.0%
-2.0%
-1.0% 2014
0.0% 2013
1.0%
2.0%
Online retailing Retail without borders Increase in international retailers Household saving patterns Road networks
