Research

In the current environment, office assets are doing it tough.

The Australian tourism industry is getting a jolt with a number of international superstars and sporting events making their way down under.

Optimism surrounding returning to work has been squashed after the results of the Property Council of Australia’s office market report last week.

After a quiet 2023, with many vendors unable to accept the new levels of yield, 2024 has commenced with a flurry of retail sales at refreshed yield levels which may signal a revitalisation of activity for the asset class.

After two years of transaction declines, what is the way forward for the commercial market?

The broader commercial property market has had some difficulties this year with reduced volumes and rising finance costs resulting in upward pressure in yields. While these pressures will remain for much of 2024, opportunities will emerge.

After a challenging 2023, with interest rate increases hampering investment activity affecting values, the outlook for 2024 will continue to be difficult.

In a time where creating vibrant workplaces is continuing to be difficult, both office owners and tenants are looking for more creative ways to get their staff back into the workplace.

The latest MSCI returns data for the year to September 2023 has recently been released, highlighting a downward turn in market conditions in the last quarter, but some asset classes have managed to weather the storm better than others.

The continued growth in finance has impacted all commercial asset classes with total returns down across most types and pressure on capital return greatest as investment yields rise.

Industrial has been the golden child of the last few years, accounting for the lion’s share of total commercial volumes. During this time we have seen some asset types’ interest dwindle, while others have surged in popularity.

Despite inflationary pressures, we are seeing the “revenge consumer” back at it, spending up on clothing, accessories, eating out and going on holidays together with growing their spend in the service sectors also.