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It might not be as sexy as a penthouse overlooking Darling Harbour or have as much cachet as a ski lodge on Mt Hotham, but an industrial warehouse could provide returns that blow the others away, according to experts.
Not only are industrial rents expected to rise, but according to Joshua Charles, regional director of industrial services and logistics at CB Richard Ellis, the industrial market stands out because it is still very cheap relative to other commercial asset classes and to residential.
He recommends industrial investment because properties tend to come with a large chunk of land, and they are generally easier to manage and maintain than other types of real estate.
Charles concedes industrial assets are often riskier than other tenancies because landlords are usually reliant on income from just one tenant, whereas other commercial properties usually have multiple tenants with leases starting and ending at different times.
But Michael Fenton, national head of industrial at Jones Lang LaSalle, says the increased risk profile is offset by generally higher yields and a lower capital expenditure requirement.
Demand for warehouse space growing
Fenton says tenant demand for industrial space is increasing every month, both in terms of enquiries and new leasing deals being struck. There is also increased interest from owner-occupiers, though this is generally confined to the “smaller end of the market” and to strata space. Both buyers and investors are finding it tough to get their hands on a property, as almost no new industrial property has been built in the past three years.
Managing director of industrial at Colliers Malcom Tyson is upbeat about the sector’s future, saying prices have “reset” and are now “reasonably good value”, meaning it’s a good time to get into the market.
Tyson says investors should look for properties close to rail, road and port infrastructure.
Charles’ tip for investors is to focus on properties with leases of less than four years, which are being overlooked by institutional investors. As the market tightens, Charles says landlords will be able to get a better deal out tenants when they look to renew in one to two years’ time.
 The east coast market – specifically Brisbane, west and south Sydney and most of Melbourne – is proving attractive to overseas investors. Charles says there is significant interest from Asian investors and some from European ones.
According to Colliers International Marketing Research Forecast Report, Sydney’s outer-west market has the cheapest prime grade rentals – between $100 and $110 per square metre annually, with yields of between 8 and 8.5%.
Melbourne’s least expensive prime grade market is in the northern suburbs, with rents between $130 and $160 and yields up to 8.25%.
Fenton tips more portfolio sales and high-end property offerings in 2011, with domestic institutions returning to the industrial market alongside overseas interest.
 New entrants to the space include the large A-REITs, fund managers who are now focused on industrial property as a core investment sector, mid-level managers and offshore groups
 Recent reports on the sector sit well with these predictions.
 NAB’s March 2011 quarter industrial market outlook (released in May) predicts the industrial property sector is due for an upswing in the next two years.
Nationwide, industrial property rents are tipped to rise by 3% over the next two years, and the national vacancy rate is tipped to fall from 5.8% to 4.4%. Under-supply is expected to be a feature of all state industrial property markets over the next three to five years.
Colliers’ Industrial Research and Forecast Report (also released in May) is equally upbeat, reporting that industrial market performance improved during first half in 2011 “as it moved through post GFC headwinds to have a more positive outlook than it had six months ago”.
Western Australia – leading the way
The NAB forecast for WA’s industrial sector is extremely healthy as the state continues to benefit from the resources boom. Over the next two years, the state is forecast to have the strongest rental growth (5%), capital growth (4%) and the lowest vacancy rates due to a lack of new construction and limited supply in the existing market.
NSW/ACT – playing the long game
Rent rises are expected to be strong in this market over the next two years, rising by 3.1 per cent as it emerges as the best-performing market by 2013. NAB also predicts capital values to increase by 1.3% during this time frame. The market is predicted to be the most undersupplied in Australia over the next three to five years.
Victoria/Tasmania – strong and steady
Victoria and Tasmania are currently the “stand-out” performers in the industrial property sector, driven by demand from major retailers and strengthening port trade. Over the next two years, capital values are expected to rise by 4%.
Queensland – getting better all the time
Though currently performing poorly, Queensland’s industrial market is tipped for modest improvement over the next two years, though at a slower rate than NSW/ACT’s. Over the next two years, NAB predicts capital values will rise by 1.8% and rents by 1.7%. The floods have tempered ongoing recovery in the Brisbane market, though it is still expected to improve due to increased tenant demand and limited new supply.
South Australia – if you build it they will come
Currently the sentiment in South Australia is cautious, but planned infrastructure projects such as South Road Superway are expected to boost the local economy and drive up demand for industrial property. An expanding defence sector, mining exploration, population growth, access and transport are predicted to assist growth over 2011, according Savills’ January 2011 outlook report.
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Industrial offers high returns for investors

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Better at sport, a more efficiently run state government and more affordable. Melburnians can now add a stronger-performing office market to the list of things they lord over Sydneysiders.
Kevin Stanley, head of research for Australian and New Zealand at CB Richard Ellis, told Property Observer Melbourne’s prospects over the next two years were bright, with a good balance struck between growth in rentals and affordability.
Melbourne’s office rentals are on average 40% less expensive than Sydney’s, and Stanley says there is room to grow but rents are “not so high as to limit expansion”.
This mix – strength rental growth combined with affordability – should offer encouragement to investors.
“Melbourne will retain lead in the short term – up until around 2013,” Stanley says. “As new buildings are completed, this will raise vacancy rates, slow down performance relative to now, but Melbourne won’t go backwards.”
A similar sentiment is echoed by Richard De Lure, senior economist at NAB, who says the Melbourne market clearly offers more than Sydney’s in terms of capital growth rate and rental expectations and will “remain strong going forward over the next 12 months to two years”.
“There is strong demand in Melbourne and a lack of supply,” De Lure says. He identifies Sydney’s land constraints as a key inhibiting factor while highlighting Melbourne’s Docklands project as a unique facet of its market.
But Sydney investors should not lose heart – the market is improving and will soon start to shake off the shackles of the GFC, which hurt the Harbour City more than any other capital city in Australia, given the loss of jobs in banking and financial services.
De Lure expects the Sydney office market will start picking up and coming back in 2012, with white-collar jobs growth expected to be strong.
NAB’s most recent Quarterly Australian Commercial Property Survey (for the March 2011 quarter) painted a rosy picture of the national office market as one of the best performing commercial property subsectors, a position it is expected to retain over the next one to two years. Nationwide capital value expectations are for growth of 2.8 % over the next 12 months and 4.3 % over the next two years.
According to the NAB report, Victoria and the much smaller Tasmanian market currently outperform all other major office markets and they will continue to set the pace during the next 12 months (to the March 2012 quarter). Conditions in the NSW and ACT markets are also expected to improve over this period “as recovering tenant demand underpins rental growth and sales activity continues to grow”.
 
State-by-state outlook
 
According to the NAB report, vacancy rates are expected to fall in all states in 2011, “partly reflecting the still poor state of the construction sector and expectations of improving tenant demand”. Stanley concurs with this assessment.
 
Victoria and Tasmania - Top of the heap
Victoria and Tasmania will lead the pack on all the key criteria in 2011 – capital value growth, rental growth, office demand and market tightness. During the 12 months to March 2012, capital values are forecast to rise by 3.5%, rental growth to climb 4.6% and vacancies to tighten to 4.5% from current level of 5.3%.
 
In 2013 capital growth is expected to reach 4.6 %.
 
Western Australia - Strengthening
Capital value growth in WA is expected to match that in Victoria and Tasmania and rise 3.5 per cent by March 2012, while vacancies are forecast to fall to 4.5% over this period. NAB predicts the market will strengthen leading into 2013, with capital value growth lifting to 4.5%. Over the course of the year, office rents are predicted to rise by 4.3%, with the resources boom driving up tenant demand for office space.
 
NSW/ACT – On the mend 
 
Although their markets have been sluggish up until now due to the GFC fallout, NSW and ACT are good medium-term bets for investors, with capital values forecast to rise by 4.8% over the next two years reflecting a slowdown in supply additions and white-collar employment growth, especially in the finance industry. In the short term though, vacancy rates in NSW/ACT are expected to fall from 8.1% to the still relatively high 6.7% as some large projects are completed this year.
 
By 2013 vacancy rates in NSW/ACT are expected to fall to 5.8%.
 
South Australia – Adelaide tight till 2013 
 
Adelaide is set to remain a tight market over the next 12 to 18 month, with no new supply expected over this time period. The market experienced reasonable rental increases through 2010, and demand has picked up in 2011. Rental growth may come under pressure in 2012 to mid-2013 with the completion of the new ATO building, Adelaide Bendigo Bank and SAPOL bringing new stock onto the market. According to Andrew Bahr, director of office services at CB Richard Ellis, the question is “whether the local Adelaide market, which has been typically driving demand over the past 18 months, has the need and capacity to take up such a large amount of stock. The recovery of the resource sector and the demand it creates both directly and indirectly will be a major determinant.”
 
Queensland – poor prospects 
 
Investors may shun Queensland in 2011 (and possibly beyond), with growth forecast at just 0.6%, the lowest in Australia. Things should start improving in 2012 – capital values are forecast to grow by 2.1%, but the state will still lag behind the rest of the country. Vacancy rates are expected to drop from the current 9% to 6% over the next two years.
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Melbourne office market leaves Sydney in the dust

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Although the strong Australian dollar is hurting the tourism sector, hotels, particularly in capital cities, are still selling well.
 According to Michael Thomson, national director of hotels and leisure at Colliers, limited supply, strong demand and high occupancy rates continue to drive the sector forward.
 “Most state capitals are performing well despite the strong dollar,” Thomson told Property Observer. “Occupancy rates are at 80% at the moment, and in Sydney it is closer to 90%. The dollar has not had a huge impact on buyers.”
 US investors in particular appear unfazed by the unfavourable exchange rate. LaSalle Investment Management snapped up the 380-room Novotel Melbourne on Collins Street in the CBD for $204 million in early May and revealed it had US$1 billion up its sleeve for more acquisitions in the Australian hotel market.
 International director Andrew Heithersay told the Australian Financial Review a major factor in its decision to invest was the “limited supply outlook coupled with Melbourne’s growing and diverse accommodation demand drivers”.
 Just a week earlier, US hospitality property group Host Hotels &amp; Resorts spent about $137 million for a 75% stake in the 396-room Hilton Melbourne South Wharf Hotel.
 Asian investors have also shown strong interest in the Australian market. Singapore investor Michael Kum added the one-year-old 275-room Travelodge in Melbourne’s Docklands to his hotel portfolio in February for a reported $54 million, and in January the prestigious 10-year-old 296-room Hilton Melbourne Airport Hotel was sold to Pan Pacific Hotels Group for $108.9 million. It was last sold in 2004 for $40 million. Patrick Imbardelli, president and CEO of the Singapore-based company, said in a press release the deal demonstrated the company’s “commitment to growing in the Australian market”.
Such positive results are reflected in NAB’s March 2011 Hotel Market Outlook, which rates the hotel sector as one of the best performers in the commercial property market. The outlook is particularly rosy for CBD hotels, where high demand from business travellers and supply constraints are keeping prices up.
Outside of the major metropolitan regions, however, the picture is markedly different, with hotels more dependent on the struggling leisure market. In this sector, the high dollar is having a restraining impact, made worse by natural disasters such as the cyclones and flooding in Queensland.
Overall, though, NAB forecasts capital values in the hotel sector to increase by 4.1% over the next year and by 5.3% over the next two years. Jones Lang LaSalle Hotels expects about $750 million worth of hotel stock to change hands in 2011, in line with the long-term average. In addition, the group expects improved trading conditions in 2011 as the “favourable supply / demand balance which existed prior to the global financial crisis comes into focus once more,” according to the company’s 2010: What A Year For Investment report.
Among the high-profile CBD hotels currently up for sale are the 273-room Hotel Enterprise on Spencer Street, Melbourne, close to Southern Cross Station, being sold by Jones Lang LaSalle, and the 67-room New Esplanade Hotel in Perth being marketed on behalf of receivers by CB Richard Ellis and Jones Lang LaSalle.
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Hotel investors can rest easy in capital cities

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Ten apartment projects comprising 1440 rooms are being marketed within the Sydney CBD zone, according to Colliers International Sydney Apartment Research &amp; Forecast Report. 
More than 60% have been sold off the plan, and only 568 remain available for purchase.
Demand drivers for apartments within the CBD and the surrounds include the view over Sydney Harbour and Botanical Gardens, proximity to employment and shopping centres and the tight residential vacancy rate of 1.2% in the inner ring of Sydney, according to the report.
 Two of the projects are nearly completely sold, including Stockland’s recently completed The Hyde, overlooking Hyde Park in the southern precinct, where only five of the 131 apartments remain for sale. The Hyde’s average sale price during the 2011 March quarter was just under $2.5 million.
 In the Northern Precinct the Stamford Residences and the Reynell Terraces development is yet to be completed, but only 12 apartments/terraces are available.
 The development in Gloucester Street in The Rocks will provide 122 one-, two- and three-bedroom apartments, plus five terraces. Since they went on the market in early 2008, 115 apartments have sold, and five terraces and seven apartments remain. The last sale was completed in the December 2010 quarter, when an apartment sold for more than $6 million.
 The INMARK Tower in Chinatown, which will comprise 218 apartments, is the next project due to be finished. More than half of these – 123 – have already been sold.
 Making up the bulk of the new apartments available for purchase is Central Park on the former Carlton United Brewery site in Chippendale. The development will comprise approximately 1,800 apartments upon completion. Currently Stage 1 “One Central Park” is under construction, and the two towers will feature 623 apartments. To date 321 have been sold.
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Sydney apartments snapped up off the plan

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The Sydney and Brisbane office markets are entering an accelerated period of rental growth, according to a new global report by CB Richard Ellis.
The report also shows that Australia office rents are cheap by comparison to other key office markets, such as Hong Kong, Singapore and Mumbai.
CBRE ranks Brisbane and Sydney alongside Mumbai, Bangalore, Taipei and New Delhi in terms of rental growth potential in its latest Market View report of Asian Pacific offices for the March 2011 quarter.
 <img src="/images/stories/sydney%20colliers-1.jpg">
Melbourne and Perth are further along the accelerated rental growth cycle, and rental growth in Canberra and Adelaide is slowing.
According to CBRE data, rents in Sydney grew three times faster (0.9%) in the first quarter of the year than they did between March 2010 and March 2011.
Brisbane office rental also remain strong, matching growth of 0.8% for the year in the first quarter of 2011.
The report says rental growth is gathering momentum in Sydney and Adelaide as landlords reduce incentives, while the development outlook for the Brisbane CBD and nearby suburbs is strong due to a lack of large office spaces in the CBD to meet demand.
Adelaide continues to perform strongly but is starting to slow down. CBRE data show that this market grew by 8.2% for the 12 months to March 2011, but by only 1.8% for the first quarter of 2011.
Perth has the most expensive prime office rents, averaging $650 per square metre per year, followed by Sydney at $607, Brisbane at $624, Melbourne at $434, Adelaide at $369 and Canberra at $352.
Australian office rents are cheap by comparison with the major metropolises in Asia Pacific.
Sydney’s average rent equates to an average of US$58 per square foot, but in central Hong Kong, by far the most expensive place to rent office space in the region, one square foot of office space costs US$186 per square foot. The next most expensive are inner Tokyo (U$124) and Mumbai’s Bandra-Kurla Complex (US$109.50).
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Sydney and Brisbane office rents cheap but growing: report

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If current home ownership trends continue, one in four Australian retirees will be renters rather than home owners by 2040, a new white paper by Australia’s largest superannuation fund claims.
Rather than invest in property, people are choosing to invest more money in their super funds. Data compiled by REST Industry Super shows that in 2000, 18.6% of those aged between 45 and 54 had more than $100,000 in their superannuation funds. By 2007 this had risen to nearly 27%. The proportion of people aged between 35 and 44 who had between $50,000 and $99,999 invested in super increased from 10.4% to 18.4% over the same period.
Correlating this with ABS home ownership data from 1995-96 to 2007-08, the report shows that the percentage of people under 35 who either owned their homes outright or were paying off mortgages declined from 45% to 37%. If this pace of decline continues, the report argues, it is “inevitable that for an increasing number of Australians, buying property will no longer be the largest investment they make in their lifetime”.
The decline in home ownership is more pronounced the younger the age group. Extrapolating the current 2007-2008 home ownership data reveals that by the time those currently aged between 45 and 54 reach 65, in the next eight to 17 years, one in five will retire without owning their own home.
When those currently aged 35 to 44 reach retirement age, a quarter will not own their own home. And by the time today’s 25- to 34-year-olds reach 65, in 28 to 37 years, a third will be still renting.
“This trend in declining home ownership reflects a combination of both choice and necessity. Some people in younger generations are consciously deciding not to purchase a home. Meanwhile, others want to buy a home but are unable to because of the reduced affordability of housing, especially in capital cities,” the report says.
According to REST Industry Super, the dual trends of lower home ownership and rising superannuation balances means that individuals who do not own their homes will need to ensure they have sufficient alternate retirement savings, which may include superannuation savings.
The median superannuation balance for 55- to 64-year-olds was about $70,000 in 2007. “Unless this is supplemented by other retirement income, like a home or investment property, $70,000 is unlikely to be adequate to support someone through the 15-25 years of their retirement. Retirees will be heavily reliant on the age pension and associated benefits,” the report says.
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Home ownership dream could be in twilight years

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The struggling new home building industry will be in even worse shape should the RBA decide to raise interest rates this year, the Housing Industry Association has warned. 
The warning comes on the back of new home sales increasing by just 0.2% in April, according to the latest HIA – JELD-WEN New Home Sales Report.
Detached house sales increased in NSW (7.8%) and Victoria (2.2%), but fell in Queensland (1.5%), South Australia (0.5%) and Western Australia (10.3%). The sale of multi-unit buildings posted a third consecutive monthly decline, falling by 2% nationwide.
HIA chief economist Harley Dale says the new home building industry is “struggling under the weight of excessive taxation and regulation, a stalled housing supply reform process, and uncertainty over interest rates".
“That profile is an unfortunate indictment of the weak new home building conditions prevalent in 2011 amidst a growing housing shortage, but it’s nothing compared to what we’ll see if another rate hike bullet is fired,” Dale says.
For the year to April, Dale says new detached house sales are running at a volume 22% lower than the long-term average, and new multi-unit sales are down by more than half.
“An industry kick-start is required together with a reinvigoration of the reform process,” he says.
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New home sales could worsen, says HIA

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Collapsed bookseller REDGroup has highlighted rental costs as a major issue facing retailers as part of its submission to the Productivity Commission’s inquiry into the retail industry.
REDGroup, owner of Borders and Angus and Robertson, currently in administration, wrote in its submission – seen by the AFR – that although Australian businesses’ average sales per square metre are equal to those of their global peers, average square metre retail leasing cost costs $770 in Australia, the highest in the world.
“As the bricks-and-mortar retailer revenue model becomes increasingly challenged, so will the current rental cost model,” REDGroup wrote in its submission. “Landlords who have transparency of their tenants’ sales performance will need to review their rent models as retailers start to question the value of bricks-and-mortar stores beyond the ‘flagship’ store in key locations or hubs.”
Borders rented on Pitt Street Mall in Sydney, among other locations. According to a Spring 2010 Colliers report, the average weekly retail rent in Sydney on Pitt Street Mall sat at US$769 per square metre, the sixth most expensive in the world. Paris’s Champs-Elysees ranked as the dearest retail rent at $1,255 per square metre, followed New York’s Fifth Avenue at $1,250, Russell Street in Hong Kong at $1,205, London’s Bond Street at $1,174 and Milan’s Via Monte Napoleone at $929, according to Colliers.
Concerns over rental costs come as a deed of company arrangement is due to be agreed this week between administrator Ferrier Hodgson and the group’s creditors.
REDGroup went into voluntary administration on February 17 this year owing about $8 million to employees, $118 million to secured creditors and $44 million to unsecured creditors.
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REDgroup says retail rent too high

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A combination of low unemployment and rising household incomes should ensure that the rate of prime mortgages 90 days or more in arrears remains under 1%, according to Tim Lawless, head of research at RP Data.
Lawless was speaking to Property Observer on the back of the latest Fitch Dinkum Index, which revealed that rate of second-tier residential mortgage-backed securities (RMBS) loans more than 90 days in arrears had increased. Arrears jumped from 0.54% in the fourth quarter of 2010 to 0.65% in the first quarter of 2011.
This is still under the 0.72% recorded for arrears of more than 90 days in the December 2008 quarter during the height of the GFC.
 “It is very doubtful we will see prime loan delinquencies rise much higher than the current rate, considering unemployment is so low and household incomes are rising at a rate more than double that of CPI,” Lawless says.
“As evidenced by the high rate of household savings, it is likely that most Australian mortgage holders are focusing on paying down debt rather than spending.”
According to Lawless, “Australia’s full-recourse lending regime is a major incentive when it comes to debt payment.
“The vast majority of Australians will adjust their spending patterns and make lifestyle sacrifices before they fall behind on their debt payments,” he adds.
A report in The Sydney Morning Herald highlighted efforts made by the major banks to breathe life into mortgage lending by a combination of discounts on mortgage rates and lower lending requirements on prime mortgages.
Commonwealth Bank of Australia has increased its loan-to-valuation ratio from 90% to 95%, and Westpac is allowing people to borrow up to 85% of the value of their homes without requiring lenders mortgage insurance.
The Fitch Index recorded that delinquencies of more than 30 days in the Australian prime RMBS sector reached a record high of 1.79% in the first quarter of 2011, up 42 base points from the December 2010 quarter. The previous peak was in December 2008.
Fitch analysts believe RMBS delinquencies have peaked in the current cycle and expect them to “fall slightly in either quarter two, 2011 or quarter three, 2011 as the usual seasonal effect dissipates and borrowers affected by flooding are expected to receive financial support and for business conditions stabilise”.
 The prediction does not factor in the impact of likely interest rate rises later this year.
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Mortgage delinquencies won't rise: RP Data

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Condé Nast has become the first major tenant of the One World Trade Center, the new skyscraper under construction at New York’s ground zero, the site of the September 11, 2001 terrorist attacks.
The magazine group, publisher of Vogue, Architectural Digest, The New Yorker and Vanity Fair, has signed a 25-year lease agreement with the Port Authority of New York and New Jersey to rent 92,900 square metres of the new tower, expected to be completed by early 2014.
The deal is reportedly worth US$2 billion (A$1.86 billion). Condé Nast has been based near New York’s Times Square since 1999.
Condé Nast will rent almost a third of the total available office rental space in the building, which will have 71 floors of office space. It is the biggest rental agreement signed in Lower Manhattan in more than 25 years.
The lease was finalised by a team led by Philippe Visser of the Port Authority, Tara Stacom and Alan Stein of Cushman &amp; Wakefield and Mary Ann Tighe and Greg Tosko of CB Richard Ellis.
Condé Nast is the second tenant signed to One World Trade Centre. In March 2009, China Center New York LLC, a division of real-estate investment company Vantone Industrial Co., Ltd., signed an 18,000 sqm lease, covering portions of the 64th floor and the entire 65th through 69th floors of the building.
Cushman &amp; Wakefield is the exclusive leasing agent for the building's 1.8 million square feet of office space that remains available.
Frank Lowy’s Westfield Group has an agreement with the Port Authority of New York and New Jersey (announced in January 2008) to jointly develop and operate the 45,000-square metre retail component of the World Trade Center site.
One World Trade Center has been designed by architect David Childs, of Skidmore, Owings and Merrill, and is the lead building on the site where the Twin Towers once stood.
Upon completion in 2013, One World Trade Center will be the tallest building in the US, with 278,000 square metres of office space, rising up 541 metres. Construction at One World Trade Center is up to the 66th floor and rising at a rate of one floor per week.
 
Leasing wrap: Rehau signs four-year deal in Wetherill Park
International polymer company Rehau will lease 4052 square metres of industrial space in Wetherill Park, in Sydney’s western suburbs, for the next four years. Greg Pike of CB Richard Ellis negotiated the deal $105-per-square-metre deal on behalf of FFCC Pty Ld. The freestanding building is at 396 Victoria Street.
New neighbours at last The newly refurbished office building at 116 Adelaide Street, in Brisbane’s CBD, has found its first tenant since whole-of-building tenant MBT moved out in mid-2010. Financial services ICT company TSWG has signed a deal to rent two floors, or 767 square metres, for just over five years, according to the Australian Financial Review. Market rate is $535 per square metre, and the deal was negotiated by Jones Lang LaSalle’s James Montague.
RPR untangles new lease Hair product company RPR Hair Care has signed a six-year lease for a 1440-square-metre property in Moorabbin, 15 kilometres south east of Melbourne’s CBD. The company intends to use 250 square metres as office space and the rest as a wholesale warehouse, the Financial Review reports. The lease at 16 Edgecombe Court, which will cost RPR about $113,000 a year, was negotiated by Daniel Kelly of Savills Australia.
Hammering out the details Total Tools will rent an industrial space in Thebarton, in Adelaide’s inner suburbs. The 1900-square-metre property at 59-60 Port Road will cost the tool company $305,000 a year, according to the Sydney Morning Herald. George Mocatta and Jon Nitschke of Knight Frank negotiated the lease on behalf of Rocca Family Trust
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Magazine empire to rent one-third of One World Trade

Eddy Haddad's <a href="https://www.apartments.com.au/developers/level-33">Level 33</a> is levelling up its approved Wollongong development, as the coastal city south of Sydney continues to prove popular in the high-density development space.

Level 33, a longtime developer in the Wollongong area, has gone through the NSW Government's Housing Delivery Authority to upsize its approved two-tower development on the corner of Crown Street and Gladstone Avenue, just 100 metres from Wollongong Station.

The developer currently has approval for 252 apartments across two buildings rising to 19 storeys. It is now seeking approval for 33 and 38-storey towers that would deliver 467 apartments, including 67 affordable homes.

Designed by <a href="https://www.apartments.com.au/architects/bka-architecture">BKA Architecture</a>, the development would comprise apartments above a three-level podium with around 1,100 sqm of retail space, along with basement parking for 448 vehicles.

According to the Urban Design Report by BKA, the proposal has the capacity to "reinforce the precinct's identity by strengthening links between health, education, and transport services, while also contributing to Wollongong's ongoing evolution as a key regional centre."

Wollongong is somewhat in vogue. Between Level 33 and Urban Property Group, the two developers have several thousand apartments planned across the city.

Level 33 is currently delivering Easterly Wollongong, one of its most boutique projects to date with just 21 high-end apartments, as well as Atchison &amp; Kenny, a 329-apartment development due for completion later this year. The developer also plans to redevelop the 13,088 sqm WIN Grand megasite into a new $500 million precinct with nearly 600 apartments and has more than 900 apartments planned for the former Bunnings Warehouse site at the intersection of Gipps and Flinders streets.

Urban Property Group is also playing a major role in the city's transformation. Its five-tower Keira Place precinct will deliver more than 800 homes, and it has recently lodged plans for a further 300 apartments near Wollongong Station.

Joel Robinson

First look: Level 33 upsizes Wollongong apartment towers

Just a week after filing plans for the final stage of its major Keira Place masterplan, <a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has unveiled another significant housing proposal in Wollongong, this time targeting a prominent site opposite North Wollongong Station.

The developer has lodged a State Significant Development Application for a 38-storey mixed-use tower at <a href="https://www.apartments.com.au/new-apartments/4-4a-flinders-street-north-wollongong-nsw-2500">4-4A Flinders Street</a>, around one kilometre north of the <a href="https://www.apartments.com.au/new-apartments/keira-place-wollongong-120-122-smith-street-wollongong-nsw-2500">Keira Place precinct</a> currently taking shape on the edge of the CBD.

<img alt="First look: Urban Property Group plans 38-storey North Wollongong tower as Keira Place expansion gathers pace" data-entity-type="file" data-entity-uuid="2b6428f1-6405-4038-8476-897de440e90d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/flinders%20podium.png?VersionId=QLqEvK0OuCEwRC47oHNftrw2B1YqaHF8" />

Designed by Studio.SC, the proposal comprises a 38-storey mixed-use development containing 303 apartments, including 45 affordable housing units, alongside 174 co-living residences. The scheme also includes ground-floor retail space, extensive landscaping and public domain improvements.

Studio.SC noted in the proposal it "outlines a vision for a landmark transit-oriented mixed-use development centred around North Wollongong Station, designed to support the city’s future growth while responding to the NSW Government’s housing and planning reforms."

The architecture firm said the proposal responds to the opportunities and constraints shaping future growth within the 400-metre catchment of the station and represents "a coordinated and future-focused approach to urban intensification, contributing to the long-term evolution of North Wollongong as a connected, walkable and high-density station precinct."

The site occupies a strategic corner bounded by Flinders Street, Station Street, Stafford Street and the Princes Highway, directly opposite North Wollongong Station.

<img alt="First look: Urban Property Group plans 38-storey North Wollongong tower as Keira Place expansion gathers pace" data-entity-type="file" data-entity-uuid="7863adad-1f71-4022-b850-f44b252738fd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/flinders%20podium%20a.png?VersionId=WsU7av0g8_8R2tGHWxgHeFSlhu7yeY1V" />

The proposal follows Urban Property Group's recent submission for the second and final stage of Keira Place, which would deliver a further three buildings comprising 657 homes opposite Beaton Park. It builds on the first stage, which features 150 apartments across two towers and recently commenced construction.

Urban Property Group CEO Patrick Elias said breaking ground on the first stage marked a significant milestone for Wollongong and reflected the developer's long-term commitment to regional cities.

"Today's groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong's city centre," Elias said.

"Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection."

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/urban-property-group-unveils-trio-of-towers-for-next-stage-of-new-wollongong-precinct-keira-place">Urban Property Group unveils trio of towers for next stage of new Wollongong precinct, Keira Place</a>

First look: Urban Property Group plans next major Wollongong tower

<a href="https://www.apartments.com.au/developers/arada">Arada</a> has wasted little time expanding its ambitions in Campsie, lodging plans for a second major project in the rapidly transforming town centre just months after unveiling its three-tower One Campsie proposal on Beamish Street.

The UAE-backed developer has now taken aim at one of the suburb’s most strategically positioned sites, filing a State Significant Development Application for a <a href="https://www.apartments.com.au/new-apartments/10-north-parade-campsie-nsw-2194">33-storey mixed-use tower</a> at 10 London Street and 43 North Parade, directly opposite the future Campsie Metro Station. The proposal is currently on public exhibition and represents another significant vote of confidence in Campsie's emergence as one of Sydney’s key transit-oriented growth centres.

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a>, the development would deliver 156 apartments above a podium containing retail and commercial space, creating a new residential and commercial gateway to the town centre. The scheme also includes a four-level above-ground parking podium and a dedicated residential amenity floor featuring wellness and recreation facilities. At least 10 per cent of the apartments would be allocated as affordable housing for a period of 10 years.

The proposal occupies a 1,631 sqm site bounded by London Street, North Parade and Dispensary Lane, immediately adjoining the future Metro station precinct and just metres from Beamish Street’s retail and dining strip. According to the Urban Design Report, the project seeks to deliver "a great place that prioritises human-scaled experience and provides spatial improvements to the area."

<img alt="First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans" data-entity-type="file" data-entity-uuid="175a8324-015b-4856-abe3-ce6f23199fa7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/podium%20campsie.png?VersionId=742UGwXFhFBX4GEl6wX4PYIWREAgn6il" />

Woods Bagot describes the tower as a key marker within Campsie's next phase of growth.

"Located directly opposite the new Campsie Metro Station on North Parade, 10 London Street is a thoughtfully composed 33-storey mixed-use tower that contributes to the ongoing transformation of the town centre," the Architectural Design Report states. The report says the project is intended to provide "high-quality homes within a vibrant, connected urban environment, while helping define Campsie's future skyline."

A strong emphasis has been placed on the public realm. The ground floor incorporates over 500 sqm of retail space and active frontages along both London Street and North Parade, while the podium is wrapped by extensive landscaped planting intended to soften the building's scale and strengthen the pedestrian experience. The development would also widen surrounding footpaths and improve connections between the Metro station and the broader town centre.

Above the podium, residents would have access to more than 1,400 sqm of communal amenities, including a pool, gym and landscaped recreation spaces. A distinctive green-wall treatment extending across four podium levels forms a major architectural feature, helping differentiate the project within the emerging high-density precinct.

The tower's design is closely tied to the broader Campsie Town Centre Master Plan and the arrival of Sydney Metro. The Urban Design Report notes the proposal "directly supports the Campsie Town Centre Master Plan by delivering new homes in a location explicitly identified for growth, improved accessibility, and high-quality urban renewal." It adds that the project contributes to the master plan's vision for a strengthened town centre supported by thousands of new homes around the future Metro station.

<img alt="First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans" data-entity-type="file" data-entity-uuid="bfd17654-253e-489a-bade-6278d63db412" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/base%20campsie.png?VersionId=3roJPMQGs36dazpkhvpvbDDP73Ld.Ica" />

The application follows Arada's recently lodged One Campsie project at 124–142 Beamish Street and 16–18 Ninth Avenue, where the developer is seeking approval for 346 apartments across three towers rising 24, 32 and 39 storeys. Together, the two proposals would cement Arada as one of the most influential developers shaping Campsie's future urban form.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-arada-files-for-trio-of-apartment-towers-in-campsie-town-centre">First Look: Arada files for trio of apartment towers in Campsie town centre</a>

Arada entered the Australian market in 2024 and has rapidly assembled a significant development pipeline across Sydney. Alongside its Campsie holdings, the developer is soon to launch <a href="https://www.apartments.com.au/new-apartments/wattle-green-2-fishburn-crescent-castle-hill-nsw-2154">Wattle Green</a> in Castle Hill, and has expanded its local operations following its acquisition of construction firm Roberts &amp; Co.

Located around 14 kilometres south-west of the Sydney CBD, the site sits at the centre of one of Sydney's fastest-changing middle-ring precincts. The Metro conversion of Campsie Station, combined with Canterbury-Bankstown Council's master planning framework, is driving significant residential intensification around Beamish Street and North Parade, with thousands of new homes expected over coming decades.

First look: Arada doubles down in Campsie with 33-storey Metro-front tower plans

For the first time in a long time, Australia's inflation story is starting to look more like a landing than a fight.

The latest Consumer Price Index figures from the Australian Bureau of Statistics showed annual inflation eased to four per cent in May, down from 4.2 per cent in April. On the surface, that might not seem like a major move. Inflation remains above the Reserve Bank's target range and some categories continue to record stubborn price growth.

But the significance of this result lies less in where inflation sits today and more in what it means for where interest rates are likely heading next.

The biggest takeaway is that inflation continues to move in the right direction.

Markets had been bracing for another sticky result after a period where progress appeared to stall. Instead, headline inflation came in softer than expected, helped by falling fuel prices and easing transport costs. Annual transport inflation halved from 6.6 per cent in April to 3.3 per cent in May, while automotive fuel prices fell 11.9 per cent during the month following lower oil prices and the impact of reduced fuel excise measures.

While petrol prices don't solve Australia's affordability challenges, they are one of the most visible and immediate costs for consumers. Falling fuel costs feed through the economy quickly, helping ease pressure on household budgets and business operating expenses.

The ABS data also showed headline inflation is now sitting at its lowest annual level in several months, reinforcing the broader trend that price growth is gradually moderating.

That trend is important because it aligns with what many economists and lenders have been saying for the last month.

Prior to this week's inflation data, ANZ, NAB and Commonwealth Bank had all shifted their forecasts, now believing the Reserve Bank had likely reached the peak of the interest rate cycle. Following the May inflation release, ANZ reaffirmed that view.

In its latest economic update, ANZ said it expects quarterly trimmed mean inflation to come in at 3.7 per cent for the June quarter, slightly below the Reserve Bank's forecast of 3.8 per cent. Importantly, the bank said that outcome, when combined with slowing economic activity, "supports our view that the cash rate has peaked".

The Reserve Bank has spent the better part of three years attempting to bring inflation under control through higher interest rates. If Australia's major banks are correct and rates have now peaked, the conversation shifts from how much higher rates could go to when they might begin coming down.

Westpac's caution comes from underlying inflation. The trimmed mean, the measure most closely watched by the Reserve Bank, increased from 3.4 per cent to 3.6 per cent annually. Housing inflation remains elevated at 6.5 per cent, reflecting ongoing increases in rents, electricity costs and new dwelling construction.

Electricity prices remain particularly problematic, rising 21.1 per cent over the past year following the removal of government rebates.

Housing construction costs are also showing signs of renewed pressure. ANZ noted new dwelling costs rose 0.9 per cent in May and are now running at an annualised pace of 8.6 per cent over the past three months. Builders continue to face higher labour, fuel and material costs, a reminder that inflationary pressures have not completely disappeared.

Housing affordability has deteriorated largely because of higher interest rates rather than higher property prices alone. Even modest reductions in mortgage rates would improve borrowing capacity, increase buyer confidence and reduce repayment pressure on existing homeowners.

While August is far from a certainty, the latest inflation result has strengthened the view that the next move in rates is more likely to be down than up. For borrowers, buyers and the development sector, that alone represents a significant shift from the conversation that dominated much of the past two years.

The inflation result the property market was waiting for

Commercial property group FiveX is doubling down on its move into the residential space.

The group, founded by Joshua and Marko Berger more than five decades ago, has followed up its plans for a 39-storey tower on North Sydney's Alfred Street with a proposed 61-storey tower in Chatswood.

The new tower at <a href="https://www.apartments.com.au/new-apartments/815-pacific-highway-chatswood-nsw-2067">815 Pacific Highway</a>, which would be one of the tallest proposed in Chatswood in recent years, will comprise 490 apartments, 76 of which will be dedicated affordable housing and managed by Evolve Housing for a minimum of 15 years.

The project will replace the long-standing Panorama Building, originally known as the BMA Tower, a 14-storey office building completed in 1972 and designed by Hungarian-born architect Hugo Stossel. At the time of its completion, the building was the tallest structure in Chatswood and became a local landmark due to its distinctive curved form and external glass lift.

<img alt="FiveX" data-entity-type="file" data-entity-uuid="956bd299-3864-47a0-8ea6-162b5524c5d8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.02.03%E2%80%AFPM.png?VersionId=EWx7teUr7RcYrI9mgRytwppwt5AdUDtb" />

fjcstudio is behind the designs. Its Architectural Design Report argues the ageing commercial building no longer reflects Chatswood's role as one of Sydney's key strategic centres and that the site is ideally positioned to support significantly higher residential density.

"The site is located at the heart of Chatswood, within the TOD accelerated rezoning area that supports higher density development around the new Metro station," the report states.

"The site's role within a walkable 400-metre radius catchment is where housing, employment, retail and community uses are encouraged to cluster in support of transit-oriented living."

<img alt="fjc" data-entity-type="file" data-entity-uuid="8d198f5e-cc71-4175-9357-be6ec7207473" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.18.27%E2%80%AFPM.png?VersionId=5WUFc3IYBPvhQMBUYLCsjJhzdcVeYodE" />

The proposal has undergone two rounds of review by the NSW State Design Review Panel, with the design evolving through an extensive assessment process focused on design excellence, public realm outcomes, residential amenity and the integration of affordable housing.

fjcstudio says the residential component provides a diverse mix of apartment typologies, supporting a broad demographic and contributing to housing supply in a highly accessible location close to major transport, employment and retail infrastructure.

The application follows FiveX's plans for a 39-storey tower at <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">275 Alfred Street</a>, which it <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">submitted through the same NSW Government pathway</a> in December. That's for 184 apartments.

Recent activity in Chatswood includes Hyecorp launching its Archer Street project, Celine, and Develotek securing approval for a 34-storey tower.

Larry Schlesinger

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