Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

Joel Robinson

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
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[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Local Little Bay residents, along with buyers from premium postcodes across Sydney’s affluent Eastern Suburbs, have dominated purchases in developer-builder Urban Property Group’s first Eastern Suburbs apartment development, <a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a>.

The $250 million coastal project, one of the first new developments in the area in several years, has proven particularly popular with downsizers, especially those from Coogee and Bondi. One Double Bay downsizer paid $4.7 million for a four-bedroom penthouse, setting a new local apartment price record in the process.

Buyers have been attracted to the combination of coastal tranquillity, premium design and amenity-rich neighbourhood living. The walkable village setting, along with proximity to three of Sydney’s leading golf courses, New South Wales Golf Club, St Michael’s Golf Club and The Coast Golf Club, has also been a key drawcard.

[smartcode_project:default project_id=112343 project_image_fid=352689]

Built across two low-rise buildings designed by <a href="https://www.apartments.com.au/architects/hill-thalis-architecture-urban-projects-pty-ltd">Hill Thalis</a> and set along a lush, landscaped green spine, designed by leading landscape architect <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>, ESTE Little Bay offers a collection of one, two, three and four-bedroom residences with interiors by Richards Stanisich.

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> Sales Director, Tom McIvor said the response to ESTE has been "nothing short of extraordinary."

“Buyers have been quick to recognise ESTE as a rare opportunity to invest in a coastal sanctuary that offers both seclusion and connectivity to the heart of Sydney,” McIvor said.

[smartcode_project:default project_id=112343 project_image_fid=352687]

<a href="https://www.apartments.com.au/project-marketer/srm-residential">SRM Residential</a> Senior Director, <a href="https://www.apartments.com.au/project-marketer/srm-residential">Clayton Ross</a> said the local market has responded incredibly well, driven by ESTE’s exceptional location and the rarity it offers.

“We’ve seen strong interest from a variety of buyer groups, all of whom are drawn to the exclusivity and quality of the build and construction by the 4.5-star iCIRT-rated builder / developer, Urban Property Group. There’s truly nothing else like it along Sydney’s coastline.”

[smartcode_project:default project_id=112343 project_image_fid=352690]

The project also includes robust buyer protections, including Resilience Insurance’s Latent Defects Insurance, providing 10 years of structural cover, and an independent iCIRT-rating of the developer.

“The iCIRT-rating adds another layer of confidence,” Ross added. “Buyers see it as a safeguard for their investment and their lifestyle.” A highlight of ESTE’s offering is its exclusive wellness amenities, including a heated rooftop infinity pool and outdoor heated spa, a state-of-the-art Technogym fitness centre, and a sauna.

<a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a> is topped out and is on track to complete towards the end of 2026, with residents moving in before Christmas.

[smartcode_project_cta:default project_id=112343]

Eastern Suburbs buyers snap up ESTE Little Bay apartments

Melbourne

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Melbourne CBD’s office market is on an upswing, with vacancy rate at its lowest in five years, but a pause is likely before the second leg kicks in at the turn of the decade, according to BIS Oxford Economics.
The Victorian capital’s office market posted impressive results through 2016. The CBD vacancy rate fell by 140 bps to 6.4%—its lowest level since 2012—net effective rents increased by 14% and capital values surged almost 20% higher. 
The positive momentum is continuing this year and the trend is far from over, says the forecaster. However, it won’t be all smooth sailing and a looming slowdown in demand lies ahead coinciding with a spike in new supply, it said.
A similar trend was witnessed in the <a href="/expert-insights/investing/melbourne-city-fringe-office-vacancy-rate-declines-colliers">city fringe market</a> as well, with vacancy rate dropping to 3.47 percent in March from 4.96 percent in September 2016, according to a separate report by Colliers International.
“This is the lowest vacancy rate that Colliers International has ever recorded for the City Fringe market, and is the outcome of strong demand and very low levels of supply," said the Colliers report.
Last year’s strong run in the CBD market meant average prime net effective rents rose nearly 20% above post-GFC lows, while aggressive yield compression pushed values a 90% higher, said BIS Oxford Economics. That puts average prime values around 50% above pre- GFC peak levels. 
After a high like this, one might expect a muted outlook for the market. But BIS Oxford Economics expects further gains of more than 60% in prime net effective rents and almost 50% growth in values to a peak in the early 2020s. 
However, senior project manager and report author Maria Lee has a caveat.
“It won’t be smooth sailing through the upswing. In particular, Victoria faces several headwinds that are likely to cause economic growth to slow over the next few years, with a negative impact on the demand for office space,” Lee said. 
This slowdown in demand is likely to coincide with a substantial quantum of new supply coming on to the market. 
Six major towers are currently under construction in the CBD, with work on two more likely to begin shortly. These will be completed from the second half of 2018. 
Although substantially pre-committed, there is an as-yet uncommitted component which will result in considerable back-fill space becoming available, according to the forecaster.
The impact of these coming changes to the demand/supply balance would be more like a pause in the upswing rather than an end to the trend. 
“Melbourne retains a key affordability advantage over its northern neighbour and competitor, Sydney. This will help to insulate Melbourne somewhat from the negative impacts of the closure of the Hazelwood power station, the end of car manufacturing and a coming downturn in residential construction. For a national company looking to expand its back-office functions, the scales are tipped in Melbourne’s favour,” Lee said. 
The rental differential with Sydney is only set to increase over the next few years, according to BIS Oxford Economics, with Sydney’s CBD rents set to surge as the vacancy rate gets extremely tight for an extended period. 
Once Victoria has emerged from the challenges of the next few years, BIS Oxford Economics expects that Melbourne’s inherent advantages of plenty of skilled labour, a cheap and plentiful supply of land for residential, industrial and commercial building, and lower rents will come to the fore and support the second leg of the upswing. 
“Any near-term weakness should not discourage market participants from the longer term prize” concludes Lee. 
 
 
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jonathanchancellor-7SQnKwU6yx

Melbourne’s office market vacancy lowest since 2012, but slowdown likely: BIS Oxford Economics

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Treasurer Scott Morrison's Budget focusses on freeing up more land for building homes as part of the measures to address affordability issues in major capital cities.
As part of the move to free-up Commonwealth land, 127 hectares of defence land in the Melbourne suburb of Maribyrnong would be earmarked to allow for 6000 new houses, according to the Herald Sun. The suburb is just 10 km north of the city.
The median house price in Maribyrnong was $940,000, while for units it was $460,000, according to www.realestate.com.au which cited CoreLogic RP Data.
The range of measures announced in the Budget include working with states and territories to reform planning and zoning laws, and setting up a $1 billion National Housing Infrastructure Facility to “address infrastructure chokepoints that are impeding housing development in critical areas of undersupply”.
The decision to unlock defence land for housing development comes amid rising affordability in and around the Melbourne CBD and adds to the state government's earlier measures to ease the situation.
Aside from that, regional Victoria is also set to benefit from a $472 million growth fund to help communities adapt to the changes economy.
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j.ballantyne1990-6AQqhLzZaK

Budget 2017 to free up defence land in Melbourne's Maribynong for 6,000 homes

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Victorian shopping centres are emerging as the asset of choice for Chinese investors, with the sale of Arena Shopping Centre in Melbourne for $48 million being the latest transaction. 
Over the past 15 months, Chinese investors have spent more than $380 million buying shopping centres across Victoria – highlighting the ongoing strength in investment appetite for well-located assets backed by strong tenancy profiles, according to commercial real estate firm CBRE.
Arena Shopping Centre is located in the south-east suburb of Officer.  
It is anchored by a 4,100 sqm Woolworths Supermarket and BWS on a 20-year lease.
It is positioned on a 2.97 ha site, and has 25 specialty retailers as well as a freestanding McDonald’s and Caltex Service Station.
The centre generates an annual income of $2.65 million per annum and the initial yield works out at 5.38%.
<a href="https://www.propertyobserver.com.au/images/2017/04/27/MELBRetail.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/04/27/MELBRetail.png" alt="">
The sale was brokered by CBRE with the limited supply of neighbourhood shopping centres being offered to the market underpinning strong sale results. 
 
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Chinese investor snaps up Melbourne shopping centre for $48 million 

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The office vacancy rate in Melbourne's city fringe locations fell to 3.47 percent in March from 4.96 percent in September 2016, according to Colliers International’s Metro Office report.
“This is the lowest vacancy rate that Colliers International has ever recorded for the City Fringe market, and is the outcome of strong demand and very low levels of supply," said the report.
More than 23,000 sqm of office space was absorbed in the year to March 2017, about 9,000 sqm higher than the long-term annual average net absorption rate.
"While creative type tenants have always been attracted to the City Fringe market, tenant take up was seen across a variety of industry types, including National Home Doctor Service (Health), Grey Innovation (Technology), BSGM (Construction) and The Promotions Factory (marketing/manufacturing),” the report stated.
<a href="https://www.propertyobserver.com.au/images/2017/05/02/Screen%20Shot%202017-05-02%20at%2012.38.21%20pm.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/02/Screen%20Shot%202017-05-02%20at%2012.38.21%20pm.jpg" alt="">
Colliers says that it’s not surprised that these strong demand levels and reduced options for tenants in the city fringe has given rise to good rental growth – both face and effective.
“Effective rents grew a record 22.7 percent in the year to March 2017. This effective rental growth is made up of a 13 percent rise in face rents, and a significant reduction in average A Grade incentives from 21 percent to 14 percent."
The secondary grade market is also benefiting from this strong demand with rents growing by 10 percent year on year, with incentives now averaging 18 percent.
Incentives in both the prime and secondary grade markets are low by Melbourne-wide standards (the CBD is averaging 29 percent), indicating the popularity of the city fringe market with tenants.
Owners of secondary grade stock have been taking advantage of the strong market conditions and, where space does come vacant, refurbishing their stock to attract the growing number of tenants who want non-conventional office space in the most sought after city fringe locations.
"The owners of Building 8, 658 Church St and 570 Church St in Richmond have recent leasing success stories following significant vacancy and subsequent refurbishment of their buildings,” the report said.
<a href="https://www.propertyobserver.com.au/images/2017/05/02/Screen%20Shot%202017-05-02%20at%2012.38.30%20pm.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/02/Screen%20Shot%202017-05-02%20at%2012.38.30%20pm.jpg" alt="">
Both buildings were fully let post upgrade works, with incoming tenants paying significantly more rent than the outgoing tenants in order to secure the space.
It is expected that over the remainder of 2017 and into 2018, rents will continue to rise, Colliers says.
“Following the record rental growth over the year to March 2017, we expect that effective rental growth over the year to March 2018 will be 7.5 percent. While lower than the rate we have seen in this past year, this is still well above the long term average growth rate of 4.7 percent per annum.
"Developers, however, have been taking notice of the increase in demand, and the next supply cycle is well and truly underway."
There are currently 17 buildings in planning/mooted stage in the city fringe, a far cry from previous years where residential development dominated the landscape.
A total of 111,500 sqm is planned for construction to 2020, and a further 89,000 sqm in the ‘mooted’ stage.
The next year of supply will be relatively modest, with 10,500 sqm due to complete, said the report.
However, over 2018 and 2019, approximately 95,000 sqm of new supply will come on to the market, according to Colliers.
<a href="https://www.propertyobserver.com.au/images/2017/05/02/Screen%20Shot%202017-05-02%20at%2012.38.43%20pm.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/02/Screen%20Shot%202017-05-02%20at%2012.38.43%20pm.jpg" alt="">
“It is anticipated that at this point in the cycle, incentives will begin to rise.
"Interestingly, the City Fringe market will also reach an important milestone over the next supply cycle– it will become a million square metre market.
There is currently just over 965,000 sqm of office stock in the City Fringe, and by the middle of 2019 we expect supply to tip over the 1,000,000 sqm mark."
The long-term average vacancy rate for the city fringe is 6.2 percent.
"We expect the vacancy rate to stay well under this level until March 2020, when large chunks of supply will tip the vacancy rate up to 7.7 percent,” the report stated.
Colliers says that the Melbourne CBD will also be in the midst of a supply cycle at this time, which will place further pressure on landlords to do competitive deals.
Strong demand in the city fringe hasn’t been confined to the leasing market. Of the $1.37 billion of deals in the Melbourne Metro market in 2016, 70 per cent - or $967 million worth of sales – were transacted on city fringe assets.
"Unsurprisingly, this level of activity had an impact on yields, and we saw 100 bps of compression over the year to March 2017."
A Grade yields now average six per cent in the city fringe.
"Current yield spreads of 327 bps are above the long-term average spread of 315bps, so we expect there is still room for yield compression in this cycle, particularly given the strong leasing conditions,” said the report. 
As an example, Property Observer found a 267 sqm penthouse-level office at <a href="https://www.realcommercial.com.au/property-offices-vic-melbourne-502375694">Level 11, 552 Lonsdale Street</a>, Melbourne (above) listed for sale.
Similarly, a 3153 sqm office at <a href="https://www.realcommercial.com.au/property-offices-vic-melbourne-502349974">114-128 Flinders Street</a>, Melbourne (below) has been listed for sale.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/02/114-128%20Flinders%20Street.jpg" alt="">
A 79 sqm office at <a href="https://www.realcommercial.com.au/property-offices-vic-melbourne-501693013">Suite 4.04, 838 Collins Street</a>, Melbourne (below) was recently sold in April this year.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/02/Suite%204.04%20838%20Collins%20Street.jpg" alt="">
Similarly a 291 sqm freehold office at <a href="https://www.realcommercial.com.au/property-offices-vic-melbourne-502333430">21-23 Anthony Street</a>, Melbourne (below) was recently sold in April this year.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/02/21-23%20Anthony%20Street.jpg" alt="">
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Melbourne city fringe office vacancy rate declines: Colliers

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Two warehouses in Melbourne’s Preston have been snapped up for $2.2 million.
The properties at 22 &amp; 24 Eton Street in Preston’s industrial commercial precinct have a combined building area of 1,092 sqm.
They sale price reflects a building rate of $2,014.65 per sqm, demonstrating a strong demand for similar properties in the area. 
The buyer intends on using one as an investment with a return yield of 4.86 percent whilst the other to potentially owner occupy, according to selling agent Leo Mancino of CVA.
Each property features a high clearance warehouse, two level air-conditioned office, motorised container height RSD, 3 on-site car spaces and first floor balconies. 
The properties are close to transport and shops.
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Two warehouses in Melbourne's Preston change hands for $2.2 million

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The Melbourne based property developers Asian Pacific Group are rebranding.
Founded by sixth and seventh generation members of the Deague family, it will now operate as Deague Group.
The family claims a property development tradition in the state that dates back to 1859.
W. Deague was responsible for the early works of St. Paul’s Church in Bendigo, while W.H. Deague building the tallest chimney in Victoria in 1872 and soon after the Royal Bank of Bendigo.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/20/David%20Will%20and%20Jonathan%20Deague.jpg" alt="">
CEO of Deague Group, Will Deague, said that the move acknowledged the family’s historical roots in the industry after patriarch David Deague rebranded to Asian Pacific Group in 1992.
“We’re proud of our strong family roots in the building trade, tracing back to the mid 1800s,” he said.
“Our new brand and name is a nod to our ancestor’s achievements and cements a vision for future generations to continue on the legacy and uphold the strong family values.”
The group is involved in hotel, commercial and residential developments, such as the $100 million development of Howard Smith Wharves in Brisbane, Kings Business Parkin Melbourne’s inner suburbs, and the Whitehorse Towers apartment tower,
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Asian Pacific Group rebrands as Deague Group

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Sydney developer Crown Group has entered Melbourne residential market, partnering with with Melbourne developer G3 for a 170-apartment project in Southbank.
The 175 Sturt Street site spans 2,070 sqm.
It is close to Crown Melbourne casino and hotel complex.
It will accommodate a mixed-use luxury resort-style development with ground floor retail, the Australian Financial Review reported.
"We've been strategic in our expansion interstate and this is the right time to expand to Melbourne. I would not be surprised if this is the first of a number of successful developments outside Sydney," said Crown Group chairman and chief executive Iwan Sunito.
"We hope we can set a new benchmark in apartment living in Melbourne and in other states, like we have in Sydney."
He set aside concerns about off-the-plan sales in Melbourne slowing, saying the right location would always sell.
"Depending on the location, Melbourne is still a very promising market, particularly the arts precinct, there is strong demand but not enough supply in that area," he said.
"While we continue to see enormous potential in Sydney, Melbourne is carving its own place among the top international cities in the world. Melbourne is highly regarded internationally for its liveability and we foresee a strong local demand for high-quality apartments with resort-style amenities in Melbourne."
The developer unveiled its $400 million development Waterfall in Sydney late in 2016, and said it had received strong expressions of interest ahead of its launch.
The development is scheduled for completion in 2019. 
"I would not be surprised if stage one of Waterfall sold out as there is a strong demand from local buyers wanting to live closer to amenities," he added.
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Sydney's Crown Group steps into Southbank, Melbourne residential market 

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Bali-via-Melbourne womenswear brand Mister Zimi has leased prime retail space in Melbourne’s South Yarra for its latest boutique.
The shop at 555A Chapel Street will be label’s fourth outlet.
The lease for the shop which has an area of 121 sqm, was negotiated for $145,000 per annum plus GST and outgoings. It was signed for four years with options for another four.
The deal was brokered by Jordan Ceppi of Fitzroys, who said the strong rental and long-term lease achieved in the prime section of the iconic retail strip demonstrated the confidence businesses have in Chapel Street’s future prospects.
“A label of the calibre of Mister Zimi selecting Chapel Street for its next site is the latest show of faith that the precinct is on its way up,” said Ceppi.
The Chapel Street shop will be the husband-and-wife run label’s fourth outlet, following Melbourne sites in nearby suburbs Armadale and Albert Park, as well as Byron Bay.
The business grew from a leather jacket designed by Zoe Paul and handmade by a local tailor on a trip to Bali with her husband Jimi in 2007.
The Pauls established the label in 2008 and relocated to Bali in 2010 to focus on their business. Designs are a fusion of Australian and Balinese influences and feature patterned and exotic prints, and offer inter-seasonal dresses, swimwear, footwear and accessories. Each is created individually, catering to individual needs, look and body type.
As well as having grown to four stores, the label has a strong social media following, with more than 123,000 Instagram followers and 42,500 Facebook page likes.
“The local residential population has continued to boom and is underpinning the future upside of the strip, led by the nearby Forrest Hill project that is home to nearly 4,000 residents and has seen around $2 billion worth of construction take place,” he said.
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Fashion label takes lease in Melbourne's Chapel Street

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Melbourne, which was perched at approaching the peak of the office market in valuation firm Herron Todd White's April update, continues to have the second lowest vacancy rate amongst all of Australia’s CBDs.
According to the Property Council of Australia’s Office Market Report, Melbourne CBD’s office overall vacancy rate has improved from 7% to 6.4% over the six months to January 2017.
A net absorption of 109,612 square metres in the CBD was recorded in the six months to January 2017 and a total of 40,246 square metres of new stock is due to enter the market in 2017. 
The decline in vacancy rate is mainly due to the second highest net demand figure on record (excess of three times the historical average) with positive demand particularly concentrated in the A grade segment. Eastern Core, Docklands and Flagstaff precincts have the lowest vacancy rates at 3.1%, 3.3% and 3.7% respectively while negative demand was concentrated in the Civic and North Eastern precincts where vacancy rates both rose. 
With strong tenant demand and restricted supply, we are witnessing improving effective rents with CBD incentives beginning to shift down in certain sub markets. However, leasing incentives continue to be relatively high with 25 percent to 30 percent net incentives being offered for longer lease terms across larger tenancies. 
Due to the statutory valuation in 2016, the 2017 Land Tax Assessments have come as a shock for many CBD and city fringe landlords. A large number of 2017 land tax assessments have increased substantially compared to 2016 which could have a significant impact on value, particularly when the tenancy profile is on a gross rent basis or when tenancies are subject to the Retail Leases Act, in which case land tax is non-recoverable. 
“We have witnessed land tax for some CBD sites more than double or even triple last year’s land tax,” say HTW in their report. 
The increases in land tax have significantly impacted landlords’ projected cash flow, especially if properties are tied up with long-term gross or retail leases. The effect of this increase is only now being felt as 2017 assessments were only released in January. There are very few transactions in 2017 and in any case, buyers may be going off 2016 assessments. 
For the St Kilda Road precinct, there have been significant withdrawals of office accommodation over the past couple of years as many developers are buying existing older style office buildings with the view to converting or redeveloping them for residential purposes. This reduction in stock and displacement of tenants has given a slightly false take on the market, as tenant demand is still way off historically high levels pre-GFC.
The market has also seen a flight to quality, with A grade buildings performing better than their B grade counterparts. Owners investing in the building services and end of trip facilities are being rewarded by a reduction in the letting up periods and stronger rents. In the past 12 months, incentives peaked at 32 percent, however, are now moving back down.
Due to the Melbourne Metro rail project, traffic along St Kilda Road will be severely restricted for the coming two to three years. Discussions with local leasing agents reveal that some existing tenants are attempting to take advantage of this situation by using it as a lever for better deals on renewals, particularly around negotiating shorter lease terms.
St Kilda Road will potentially always be a strong market for smaller tenants, but for the larger tenants (1,000 square metres plus) the market may be more challenging and must remain a cost effective option to overcome the threat of the CBD, Docklands and Southbank markets. This may put a ceiling on rental growth for the foreseeable future and at least for the duration of the major tunnel works. 
On the buy side, strong demand is continuing for good quality office properties within the Melbourne CBD, Metro and St Kilda Road office markets. This is primarily due to the lack of suitable stock and sheer weight of capital seeking limited investment opportunities in this segment of the market.
Assets in the $10 million to $40 million price point are expected to continue to appeal to a broad range of private investors, syndicates and self-managed super funds. Institutional buyers typically start at circa $50 million.
The CBD office market was off for a hot start in 2017 with the record breaking sale of Bourke House, 179-183 Bourke Street, which was sold to a mainland Chinese investment corporation for $33 million in March, representing a low yield of 4.3 percent and a capital value rate of approximately $20,000 per square metre. The sale also reflects a 287 percent capital gain since its last sale of $11.53 million in 2014. 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/21/BourkeHouse.jpg" alt="">
Deep pocket buyers are less focused on leasing risk, WALES and capex risk because they are more focused on location and securing assets in a limited opportunity market. Leasing risk and capex risk are considered transient risks which can be mitigated. 
On the other hand, demand is very strong for strata office floors in the CBD. This is seen as a way to gain a foothold in the CBD as some buyers struggle to afford freehold CBD properties. 
“We are also witnessing some buyers are accumulating multiple floors within the same building. “
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Melbourne has second-lowest vacancy rate among Australia’s CBDs: HTW

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Melbourne private treaty properties take, on average, a month to sell once listed on the market, according to CoreLogic’s latest report.
The property data firm says that Melbourne homes take around 29 days to be sold while units takes 30 days.
This is slightly slower than Sydney where houses and units are currently being sold by estate agents within 27 days.
<a href="https://www.propertyobserver.com.au/images/2017/05/01/Screen%20Shot%202017-05-01%20at%2012.23.39%20pm.jpg" target="_blank">Click to enlarge</a>
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Darwin places last with houses taking 87 days to sell while units take 76 days to sell.
Similarly Perth houses and units takes around 82-83 days to be sold.
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