Centuria secures record leasing deals as metro markets firm up

From
Jason Huljich

Jason Huljich

Recent leasing deals negotiated in metro office markets around Australia are evidence of a rising tide of positive sentiment and improving fundamentals, according to commercial property investment specialist Centuria Capital Limited (Centuria).

Commenting on Centuria’s most recent transactions, Jason Huljich, Centuria’s Head of Real Estate and Funds Management, pointed to strong rents and attractive lease terms, and gave details of deals struck in Perth, St Leonards and Wollongong as follows:

  • 42-46 Colin Street, West Perth – 400 sqm for 5 years to Tungsten Mining at a rate of $415 net per sqm.
  • 201 Pacific Highway, St Leonards, Sydney – 7,000 sqm over 5 floors for 5 years to CISCO at a rate of $620 net per sqm. This represents an extension of 5 years.
  • 77 Market Street, Wollongong – 800 sqm for 5 years to Illawarra Newspapers at a rate of $470 net per sqm, and 2,200 sqm for 8 years to Illawarra Retirement for $470 net per sqm.

Mr Huljich said that the Perth market is beginning to benefit from an uptick in demand from mining tenants, which make up the majority of the office tenants.

“We are seeing mining tenants starting to take sub-lease space off the market, which is evidence that the green shoots of a commodity cycle on the rise are starting to show,” he said.

In contrast, Mr Huljich said that south of Sydney, Wollongong has been tracking well for some time.

“We expect the positive market fundamentals to continue, as there is no real supply on the horizon and space is already tight and demand strong.

“In our most recent leasing deals we actually re-set rents when we agreed leases at record levels to two anchor tenants – Illawarra Newspapers and Illawarra Retirement.

“This is great news for our investors, because strong and stable rental income underpins distributions,” he said.

Mr Huljich went on to say that Centuria also has a positive view on St Leonards, on Sydney’s lower north shore, as it transforms itself into a health hub around Royal North Shore Hospital.

“NSW Health has already taken space in the area, and other health-based businesses are following suit, which has pushed up demand for office space in the area.

“At the same time, Sydney’s CBD market is becoming increasingly expensive, so with excellent transport links and proximity to the city, St Leonards is looking like a pretty good value proposition to a lot of tenants,” he said.

Centuria manages a portfolio of office and industrial properties currently valued at approximately $4.6 billion held in both listed and unlisted Centuria property funds. Properties are located in CBD and metro markets around Australia, including Sydney, Melbourne, Brisbane, Canberra, Adelaide and Perth.

According to Mr Huljich, Centuria’s objective is always to identify quality, fit-for-purpose assets which the team believes will deliver stable and predictable rental income, as well as the opportunity for capital growth over time.

“Our strategy across our listed and unlisted funds is to buy, actively manage, and strategically sell commercial and industrial property – and our 20 years of experience allow us to identify opportunities that others may miss.

“These recent lease transactions are evidence of our strategy in action – we expect them to be accretive to the value of our portfolio,” Mr Huljich said.

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