For most new apartment buildings, the Owners Corporation starts life with little more than a bank account and the first quarterly strata levies.

At <a href="https://www.apartments.com.au/buildings/9-gay-street-castle-hill-9-gay-street-castle-hill-nsw-2154">9 Gay Street</a> in <a href="https://www.apartments.com.au/developments/castle-hill-nsw-2154">Castle Hill</a>, it starts with around $7 million in reserve.

It's an unusual legacy of what was once one of Sydney's highest-profile apartment remediation projects. When the development, originally known as Skyview and built by disgraced developer Top Place, came under scrutiny by then NSW Building Commissioner David Chandler, an $11 million remediation bond was negotiated to ensure any building defects could be fully rectified.

The building underwent an 18-month remediation program, during which around $4 million of that bond was spent bringing the building up to the standard it should have been in from the outset.

After extensive inspections, all active rectification orders have been lifted. What's more, around $7.2 million remains secured for the Owners Corporation for the next 15 years.

In a twist few would have predicted, what began as a significant concern for purchasers has left the building with something almost unheard of in the apartment market: a multi-million-dollar financial reserve from day one.

[smartcode_project:default project_id=147685 project_image_fid=359136]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a> Executive Chairman Greg Huxley said the structure offers buyers a level of certainty that is difficult to replicate.

"The $11 million bond established for the Skyview Castle Hill development represents exceptional value, providing genuine financial security for purchasers," Huxley said.

"Unlike a standard insurance policy, this bond consists of real funds held in trust for the Owners Corporation, offering a tangible layer of protection and added peace of mind."

The apartments themselves have been designed with a focus on practical, contemporary living. Interiors feature Smeg appliances, stone benchtops, tiled living areas, carpeted bedrooms, 2.7-metre ceilings, floor-to-ceiling glazing, and ducted heating and cooling throughout.

Residents also have access to a range of shared amenities, including two rooftop barbecue areas, a swimming pool, children's playgrounds, secure building access, storage cages, and visitor parking.

The location continues to be one of the project's strongest drawcards. Castle Hill Metro Station sits virtually on the doorstep, providing direct connections across Sydney's expanding Metro network, while Castle Towers offers extensive retail, dining, entertainment, and service amenities within walking distance.

[smartcode_project:default project_id=147685 project_image_fid=359127]

The building, now named after its location at 9 Gay Street, comprises a diverse mix of one-, two-, and three-bedroom apartments starting from just under $600,000.

Equitifund National Sales Director Ben Hamblett said demand in the Hills District continues to be driven by buyers seeking convenience and connectivity.

"Interest from both owner-occupiers and investors in Castle Hill remains exceptionally strong, with buyers consistently prioritising developments in close proximity to the Metro station and Castle Towers Shopping Centre," Hamblett said.

"There is a clear trend in the market, with purchasers seeking convenient access to transport and lifestyle amenities that support a seamless, low-maintenance way of living."

On top of the long-term protection afforded by the remaining $7.2 million bond, Equitifund is offering a limited-time stamp duty rebate on selected apartments.

Eligible purchasers can also secure finance options, including a 3.99 per cent two-year variable rate, loan-to-value ratios of up to 90 per cent, and interest-only lending options through EquitiCredit.

[smartcode_project_cta:default project_id=147685]

Joel Robinson

Why this Castle Hill apartment building starts with a $7 million advantage

For much of the past few years, conversations about Australia's property market have centred on the rapid growth seen in Sydney, Brisbane, Gold Coast, and Perth. <a href="https://www.apartments.com.au/developments/melbourne-vic-3004">Melbourne</a> has followed a different trajectory.

That relative underperformance is now encouraging some buyers to reassess the city, particularly those willing to look beyond short-term market movements and focus on quality property in established locations, along with the long-term growth prospects of a city expected to overtake Sydney as Australia’s most populous.

John Bekiaris, Research &amp; Market Insights at <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a>, said Melbourne's current position is attracting increasingly sophisticated purchasers.

"Melbourne continues to present one of Australia's strongest long-term investment stories," Bekiaris says.

"While other capital cities have experienced stronger recent growth, that relative underperformance is exactly what's attracting sophisticated counter-cyclical investors."

[smartcode_project:default project_id=1979 project_image_fid=363268]

Equitifund isn't just commenting on Melbourne's property market, it's investing in it.

The Sydney-headquartered capital partner has taken over the remaining apartments at <a href="https://www.apartments.com.au/buildings/victoriana-melbourne-20-queens-road-melbourne-vic-3004">Victoriana</a>, the recently completed glass-encased development opposite Albert Park Lake in Melbourne's tightly held St Kilda Road precinct.

Designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> and built by <a href="https://www.apartments.com.au/builders/hickory">Hickory</a>, Victoriana places residents between one of Melbourne's most recognised parklands and the CBD, offering oversized two and three-bedroom apartments aimed at owner-occupiers seeking a genuine alternative to a traditional family home.

The development comprises 232 completed residences alongside a suite of resident amenities, including a 25-metre indoor swimming pool, gymnasium, landscaped entertaining areas, resident lounges, EV charging, secure basement parking and a concierge-style arrival experience.

[smartcode_project:default project_id=1979 project_image_fid=363229]

The apartments have been designed with owner-occupiers firmly in mind.&nbsp;Open-plan living and dining areas flow onto generous balconies framing views across Albert Park Lake, Fawkner Park, the Royal Botanic Gardens and the Melbourne skyline.

Kitchens feature Gaggenau appliances, stone benchtops and generous preparation space. Bedrooms include built-in robes, while bathrooms feature full-height textured tiling. Hardwood flooring and ducted air conditioning complete residences designed for long-term living.

Rothelowman's architecture takes its cues from the landscape opposite the site. Sweeping horizontal glazing references the movement of Albert Park Lake, while generous balconies and expansive glazing strengthen the connection between the apartments and the surrounding parklands. The result is a building designed to deliver the scale and amenity expected of luxury apartment living, while offering the larger floorplans increasingly sought by owner-occupiers.

[smartcode_project:default project_id=1979 project_image_fid=363284]

The location is one of Victoriana's defining characteristics. Positioned on Queens Road, residents are directly opposite Albert Park Lake and within easy reach of Fawkner Park, the Royal Botanic Gardens, South Melbourne, St Kilda Road and the CBD. With few comparable development opportunities remaining in the precinct, buyers are increasingly placing value on outlooks that are unlikely to be interrupted by future construction.

Greg Huxley, Founder of Equitifund, believes those qualities become even more valuable over time.

"Premium real estate has always rewarded buyers who take a long-term view," Huxley said.

"Victoriana represents the kind of asset that's increasingly difficult to recreate today, particularly in an established location like Queens Road."

He said rising construction costs are also changing the way buyers assess completed developments.

"When you combine an irreplaceable location with thoughtful architecture and premium finishes, you create something that becomes increasingly difficult to reproduce as construction costs continue to rise."

[smartcode_project:default project_id=1979 project_image_fid=363228]

According to National Sales Director Ben Hamblett, enquiry has been driven largely by Melbourne downsizers and buyers upgrading from smaller apartments.

"Interest in Victoriana continues to build, with strong buyer focus on the larger owner-occupier residences within the development," Hamblett says.

"Enquiry is increasingly driven by local buyers who recognise the rarity of what's on offer: park-facing apartments in an established neighbourhood where new development opportunities are becoming increasingly scarce. At Victoriana, the view is not just a feature; it's an appreciating asset in its own right."

He said interstate enquiry has also strengthened as buyers reassess Melbourne's position within the national property cycle.

"Melbourne currently stands as the most compelling entry point of any major Australian capital, and discerning buyers are beginning to recognise what those who move early always understand: the best opportunities are taken before the price rise confirms them."

[smartcode_project_cta:default project_id=1979]

Why now is the time to buy in Melbourne's premium apartment market

Developers and apartment buyers have a narrowing window of opportunity before Brisbane's Olympic infrastructure pipeline begins competing directly with residential construction, pushing up costs, tightening labour supply and making new projects increasingly difficult to deliver.

While Brisbane's apartment market continues to benefit from strong population growth and limited housing supply, industry research suggests the years leading up to 2027 could prove to be the most important period for developers looking to secure builders and buyers hoping to purchase before the next wave of price increases.

A new Colliers report, Brisbane 2032 Olympic and Paralympic Games: Creating Solutions, highlights the scale of the challenge. While thousands of new homes are planned across South East Queensland, the Brisbane Olympic Athletes Village alone will deliver more than 10,500 beds during the Games before being converted into around 1,750 to 2,000 apartments. Equivalent to almost two years of typical inner-city apartment supply, the project will also absorb a significant share of the construction workforce and building materials.

The broader construction pipeline paints an even clearer picture.

Construction Skills Queensland's Horizon 2032 report forecasts Queensland's annual construction pipeline will average $69 billion over the coming years before peaking at $75 billion in 2027-28. Demand for construction workers is expected to increase by 17 per cent to almost 150,000 people, with the industry facing an annual shortfall of around 19,000 workers that could blow out to as many as 35,000 during the peak construction period.

The Olympic venues, athletes village and supporting infrastructure will account for billions of dollars worth of work across South East Queensland through to 2032, creating intense competition for labour at a time when Australia's residential construction sector is already under pressure.

[smartcode_project:default project_id=150489 project_image_fid=373834]

Colliers Queensland Residential Director Andrew Scriven said the convergence of these projects is creating a clear window of opportunity for both developers and buyers.

"From 2027 onwards, the market will shift dramatically," Scriven said.

"Labour will increasingly be locked into government-led infrastructure and Olympic projects, which means private residential developments will face higher costs and tighter margins. The developers who move now are the ones most likely to get projects off the ground."

Scriven said the same dynamic would also affect buyers, with fewer apartment projects expected to launch once construction capacity tightens.

"If you're looking to change your lifestyle over the next five years, now is your window of opportunity to buy."

[smartcode_project:default project_id=150713 project_image_fid=373827]

Developers are already positioning themselves ahead of that window.

Following the success of Monarch at Toowong, Consolidated Properties is preparing to launch two new Brisbane apartment projects in the second half of 2026. They include <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> at Yeerongpilly Green, a 25-storey tower within one of Brisbane's key Olympic precincts, and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a>, a recently approved 25-storey riverfront development at 47 Skyring Terrace in Newstead.

Hutchinson Builders will deliver both projects, with early works already underway at Yeerongpilly and Newstead expected to commence later this year.

The timing comes as Brisbane's fundamentals continue to strengthen, with strong interstate migration, population growth and vacancy rates remaining below 1.5 per cent.

Colliers Queensland researcher Pragya Sharma said Greater Brisbane is forecast to require around 40,000 new apartments between 2021 and 2031.

"There's a real mismatch emerging between when housing is needed and when it will be feasible to build," Sharma said.

"As a result, the period leading up to 2027 presents a key window of opportunity for developers to secure approvals, funding and construction capacity, while buyers will have greater choice before supply constraints intensify."

Colliers research outlines a critical pre-2027 window to start residential projects before labour squeeze: now is the time to buy

Developers, buyers on watch in South East Queensland ahead of construction crunch: Colliers

It's taken less than nine months for developer Sherpa Property Group to sell out all 51 apartments in its <a href="https://www.apartments.com.au/new-apartments/flourish-oasis-palm-beach-7-9-sixth-avenue-palm-beach-qld-4221">Flourish Oasis</a> development in <a href="https://www.apartments.com.au/developments/palm-beach-qld-4221">Palm Beach</a>, over a year before its anticipated completion.

&nbsp;

Located at 7-9 Sixth Avenue, the $67 million development has resonated strongly with both local owner-occupiers and downsizers seeking high-quality apartments within walking distance of the beach, dining precincts and everyday amenities.

[smartcode_project:default project_id=151449 project_image_fid=357458]

Christie Leet, Founder of <a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Group</a>, said the sell-out reflected both the strength of the Palm Beach market and the success of Sherpa's community-first approach to development.

"The sell-out of Oasis is a fantastic outcome and reinforces the strong demand we're seeing for thoughtfully designed apartments in lifestyle locations," Leet said.

"From the outset, our vision was to create a development that genuinely enhanced the Palm Beach community while providing residents with exceptional homes and wellness-focused amenities.

"We've been incredibly encouraged by the level of local support throughout the campaign, 72.5 per cent of buyers are locals, with a significant proportion of purchasers choosing Oasis as their future home rather than an investment."

[smartcode_project:default project_id=151449 project_image_fid=357463]

Construction is now progressing following development approval, with trusted builder LPS Group delivering the project and completion anticipated in Q3 2027.

Oasis forms part of Sherpa Group's successful Flourish collection, which has become recognised for its focus on wellness, community and elevated coastal living.

[smartcode_project:default project_id=151449 project_image_fid=357469]

Residents will have private access to a rooftop amenity space featuring a pool, gym, sauna, steam room, hot and cold plunge pools, spa and barbecue facilities.

"The success of Oasis demonstrates that buyers continue to prioritise quality, location and lifestyle," Leet said.

"We are proud to have delivered a project that has resonated so strongly with the market and look forward to bringing Oasis to life for our future residents."

Sherpa recently launched <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a>, its third instalment of the Flourish brand in Palm Beach following Flourish Oasis and <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>.

[smartcode_project_cta:default project_id=151449]

Sherpa sells out Flourish Oasis in booming Palm Beach

Urban Property Group's <a href="https://www.apartments.com.au/new-apartments/la-vera-macquarie-park-94-talavera-road-macquarie-park-nsw-2113">La Vera</a> is leading the next phase of Macquarie Park's residential evolution, with the new apartment development set to become the first of several new apartment projects in the precinct to complete.

The 169-apartment building has now topped out ahead of its scheduled completion in the third quarter of 2026, as new residential investment continues to reshape one of Sydney's largest employment hubs into a true mixed-use precinct.

[smartcode_project:default project_id=134951 project_image_fid=368645]

Cox Architecture has designed La Vera to capture the best of its unique positioning on Talavera Road, orienting the building towards Lane Cove National Park.&nbsp;The building features a sculpted northern façade with flowing curves inspired by the surrounding landscape, while its city-facing elevation adopts a more structured architectural expression to maximise skyline views.

"The vision for the project was to conceive a building that adopted an organic and curvilinear form to the northern portion that faces the Lane Cove National Park," <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a> Director Felipe Miranda said.

"The residents that reside in the northern portion of the building benefit by having beautifully crafted curved balconies that speak to the natural context and heighten the relationship of their internal living spaces to the external balconies."

[smartcode_project:default project_id=134951 project_image_fid=358802]

La Vera offers a diverse mix of one, two, three, and four-bedroom configurations, with prices currently starting from $740,000. Buyers so far have been a mix of Sydney-based investors,&nbsp;metro commuters, owner-occupiers and downsizers from surrounding North Shore suburbs.

Both investors and owner-occupiers have been drawn to La Vera's proximity to Macquarie University, Macquarie University Hospital, Macquarie Centre and the Sydney Metro, infrastructure that supports both strong rental demand and a convenient lifestyle for residents.

The apartments feature full-height glazing, timber flooring throughout living areas, stone kitchen benchtops, SMEG appliances, floor-to-ceiling bathroom tiling and ducted air conditioning.

Residents will have access to a rooftop recreation level featuring a swimming pool, sauna, barbecue facilities and landscaped relaxation areas, complemented by additional communal space at ground level. Many apartments enjoy uninterrupted views across Lane Cove National Park, reinforcing the project's connection to its natural setting.

[smartcode_project:default project_id=134951 project_image_fid=364551]

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a>, a family-owned developer and builder with nearly four decades of experience, holds a 4.5-star iCIRT rating and was Australia's first developer to introduce 10-Year Latent Defects Insurance (LDI). La Vera is the first apartment development in <a href="https://www.apartments.com.au/developments/macquarie-park-nsw-2113">Macquarie Park</a> approved to offer the additional insurance protection, alongside a five-year warranty on SMEG appliances.

Urban Property Group CEO Patrick Elias said the additional protection reflects changing buyer expectations in the off the plan market.

"Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. Having LDI is a tool to portray the confidence that we have in our product, and a confidence we want buyers to share," Elias said.

Following completion of the building later this year, buyers will move into their apartments well before Christmas.

[smartcode_project_cta:default project_id=134951]

La Vera closes in on completion as Macquarie Park continues residential transformation

Office Market

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The Sydney CBD office market has a strong supply pipeline lined up with 470,000 sqm expected to be added by 2022, which will also bring a churn in office ownership levels, according to new analysis by commercial real estate firm Colliers.
The new supply in the next 5 years will push up some landlords up the ranks. 
Lendlease and Investa are expected to surpass Dexus, becoming the first and second largest office owners within the market, respectively, says CBRE report author Kristina Mastrullo.
Lendlease’s Darling Square is due for completion late this year and Circular Quay Tower is slated for completion in 2021, while Investa’s 151 Clarence Street (Barrack Place) is due late 2018 with 60 Martin Place shortly after in the first half of 2019. 
Taking into account withdrawals, such as 39 Martin Place which will make way for the Martin Place Metro Station Precinct, Dexus will slip to no. 3 position among largest office owners.
<a href="https://www.propertyobserver.com.au/images/2017/06/14/SydneyCBDOwnership.jpg" target="_blank">Click to enlarge</a>
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So, where will the supply come in?
 
Sydney CBD’s Core precinct will take on 51 percent of total office development activity over the next 5 years, says the analysis. 
 
“The Core will remain the most sought after precinct once 60 Martin Place, Wynyard Place, Circular Quay Tower and Quay Quarter Sydney are completed, driving future rental growth,” says Mastrullo in the note.
<a href="https://www.propertyobserver.com.au/images/2017/06/14/SydCBDSupplyPipeline.png" target="_blank">Click to enlarge</a>
 
 <img src="https://www.urban.com.au/images/2017/06/14/SydCBDSupplyPipeline.png" alt="">
 
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Over the last twelve months, the Core precinct has outperformed all others with an annual increase in net effective rents of 33.6 percent. The Western Corridor is due for 24 percent of overall development activity as 10 Shelley Street is due to come online along with Darling Square and Barrack Place. 
 
After combining full and partial refurbishments with new development supply, Brookfield is responsible for the largest portion of total-square-metres-under-development over the next 5 years within the Sydney CBD at 27 percent. Brookfield’s total development activity equals over 110,000 sqm which includes the full refurbishment of 10 Shelley Street and developments Darling Park 4 and Wynyard Place. 
 
AMP, Lendlease and Investa are closely ranked however Lendlease is only set to contribute new-development supply, whereas refurbishments (full and partial) constitute a sizeable portion of AMP’s and Investa’s overall construction activity over the next 5 years.
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prateek24-ezbwHMbNAk

Lendlease, Investa likely to surpass Dexus as largest Sydney CBD office owners: Colliers

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Law firm Baker McKenzie is moving into Lendlease's Barangaroo Tower One from its home at AMP Capital's 50 Bridge overlooking Circular Quay.
The leading firm has been operating there since 1978, and their move indicates businesses willing to move out from traditional areas of the city.
Property Observer had previously reported that the “Barangaroo effect” had firmly taken hold as corporate users are seeing this now as a firmly established precinct.
Baker McKenzie will occupy 7,500 square metres in the new Lendlease tower, taking levels 44, 45 and 46 for a term of 10 years, according to The Australian Financial Review.
The law firm agreed to surrender its lease in 50 Bridge, allowing the landlord AMP Capital to start its redevelopment of the precinct called Quay Quarter.
"As the leading global law firm in Australia, we are excited about our move to Barangaroo, which is already renowned for its world-class design and as a vibrant business precinct,” Baker McKenzie's national managing partner Anthony Foley was cited as saying by the AFR.
The design of the new office space is still being finalised, but it will be a mix of fully enclosed offices, semi-open offices and workstations.
Baker McKenzie was advised by Independent Corporate Property Oceania's Peter Messenger while JLL's head of leasing Tim O'Connor represented the landlord.
Barangaroo South, where Baker McKenzie's offices will be located, is the economic hub of the precinct and comprises three commercial towers known as the International Towers Sydney, where the firm will reside in the tallest office tower. Rents were not disclosed in the deal but recent gross leases in the tower have come in at about $1400 square metre before incentives. Baker McKenzie would have been given certain incentives for both the new lease and the surrendered AMP lease.
Lendlease's managing director, Barangaroo South, Rob Deck, said the deal cemented Barangaroo's position as one of the key destinations in the Sydney office leasing market
"We are delighted that Baker McKenzie have committed to space in Tower One, joining a range of leading businesses who already call Barangaroo home," Deck said.
AMP Capital managing director for office &amp; industrial Luke Briscoe acknowledged the long-term tenancy of Baker McKenzie while confirming that construction on the Quay Quarter Tower (QQT) would begin next year.
"Following the great success of our residential sales campaign for Loftus Lane apartments and securing AMP as anchor tenant for QQT, we are pleased to confirm the construction of the office tower and residential apartments will begin in early 2018."
AMP Capital plans for 50 Bridge Street includes the new 49-floor premium commercial office Quay Quarter Tower.
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jonathanchancellor-7SQnKwU6yx

Law firm Baker McKenzie makes the shift from Circular Quay to Barangaroo

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Victoria had three office sales in the first quarter of 2017 for a combined total of $730.5 million dollars, with New South Wales nine sales for a total of $605.8 million according to the Quarter Times National Office report from Savills.
Some 14 leases were signed in Victoria and Queensland during that time and 13 in New South Wales.
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 Office sales in the North Shore of Sydney totalled $446 million in the first quarter, wth Macquarie Park $120 million and the CBD at $9 million.
Sales in the Canberra suburb of Civic came to $321 million and the Brisbane fringe $205.5 million. 
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j.ballantyne1990-6AQqhLzZaK

Q1 office sales in Victoria total over $730 million: Savills

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Moving into 2017, the Gold Coast commercial property has continued to reflect strong market conditions, say valuation firm Herron Todd White in their April report which also sees Gold Coast approaching the peak of market position. 
Recently released PCA data indicates the across market vacancy level at January 2017 was 12.2 percent. This is down from 14.3 percent in July 2016 and 13.2 percent in January 2016.
Continuing the trend over the past several years, we are unaware of any planned new office buildings for 2017 apart from some smaller developments in areas such as Ashmore Road, Benowa targeting the medical sector. On this basis, the vacancy level on the Gold Coast is anticipated to improve (reduce) further moving forward. 
Sale transactions to date in 2017 suggest continuing robust interest. An example of this is the now publicly reported sale of 183 Varsity Parade, Varsity Lakes for $11.8 million. This is a 32.5 percent increase on the previous sale in December 2014 at $8.9 million.
The property has been purchased by the Clarence Property Group, a long term participant in the Gold Coast commercial market and in particular the office sector over the past few years. This two-level building of 3,153 square metres is reportedly fully leased, although net income and yield have not been disclosed. The sale reflects $3,742 per square metre on lettable area. 
<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/HTWGoldCoast.jpg" alt="">
At the other end of the spectrum is 19-21 Gardenia Grove, Burleigh Heads, which settled last month for $2.9 million. This is a converted squash centre in a beachside location providing 1,061 square metres of net lettable area. It is also fully leased, but shows a low WALE of two years. The sale reflects $2,733 per square metre and a passing yield of 7.94 percent. 
“We note there are several other commercial office buildings currently listed for sale which we anticipate when sold will demonstrate yields at or possibly 25 basis points lower than 2016.”
Of particular interest will be how the market place perceives the expansive Bundall Corporate Centre, which has an EOI campaign closing 23 March 2017. This property comprises two existing office building with 21,111 square metres of lettable area, but with a further 15,500 square metres of developable land that could provide an array of opportunities for further office space, retailing, residential apartments or combinations thereof. This is a large, commercial property ticket item for the Gold Coast, having sold in the past a couple of times pre-GFC at circa $100 million and then post-GFC at circa $60 million. 
In respect to the office rental sector, commercial agents are also reporting good conditions with reported uplift in enquiries, uplift in rental levels and stabilisation or reduction in the level of incentives. 
Typically, rental rates for A grade stock ranges between $450 and $500 per square metre gross plus car parking; B grade stock between $350 and $450 per square metre gross plus car parking, whilst C and D grade stock ranges between $225 and $300 per square metre plus car parking. Incentives would now be expected to represent circa 7 percent to 8 percent of lease term rental. 
The Gold Coast strata office market has also continued on its reasonably strong path into 2017, again buoyed by owner-occupiers taking advantage of the low interest rate environment. Value rates exhibited by good quality strata office space on the Gold Coast typically reflect between $3,500 and $4,500 per square metre inclusive of car parking and between $2,000 and $3,500 for secondary stock depending on size, location and physical attributes. These are similar levels to 2015, although the median rate in each category has probably increased circa 5 percent. 
“Moving through 2017, we would expect the buoyant conditions to be maintained on the back of sustained low interest rates and ongoing benefit of planned infrastructure associated with the Commonwealth Games in 2018.” 
“However, we do have reservations that the market is becoming over heated.” 
Further, global conditions, including a change of President in the US and the possibility of diplomatic tensions moving forward could have implications for the Australian property market overall, conclude HTW.
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Gold Coast office market robust: HTW 

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Coffs Harbour in New South Wales is approaching the peak of market position for offices, according to valuation firm Herron Todd White's April report, which focuses on the office market.
The office market in Coffs Harbour features an oversupply with limited enquiry for leasing at stable or slightly softer rental levels. 
There are a number of office project developments on hold until pre-sales or leasing is effected. These projects range from smaller strata title office projects to larger developments. The eastern precinct of the CBD remains prime with rental levels of $330 per square metre to $400 per square metre. 
Secondary or dated offices remain difficult to let. The impacts of reduced government spending, limited availability of grants and the retractionist policies are clearly evident in the Coffs Harbour regional office market. 
There is a lack of sales and leasing transactions within the office sphere of the market. Generally yields within Coffs Harbour remain firm based on the prevailing low interest rate climate. 
Leasing activity is restricted with serious owners having to offer lease up incentives or rent-free periods to attract quality tenants. 
As an example, a commercial building leased to a law firm at <a href="https://www.realcommercial.com.au/property-offices-nsw-coffs+harbour-502317902" target="_blank">134 West High Street</a> in the CBD recently changed hands for an undisclosed sum.
The tenant pays all outgoings and the property earns a net Income of $186,500 pa + GST.
 <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/CoffsHarbour.jpg" alt="">
The selling agents were Rhys Parker of Burgess Rawson and Troy Mitchell of LJ Hooker Commercial.
 
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Coffs Harbour office market is oversupplied with limited leasing: HTW 

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In calendar year 2016, metro investment volumes as a proportion of total Sydney CBD and metro sales were 57 percent with $3.9 billion in transaction volumes recorded compared to the CBD’s $2.9 billion, according to Colliers International's latest Metro Office report.
"On a 10 year average, metro sales make up 37 percent of combined CBD and metro sales each year, and for 2017 year to date, metro sales volumes have already reached 43 per cent,” the report stated.
Scarcity of investment supply and strong demand drove down metro yields during 2016 Colliers says.
“We expect A Grade metro yields to compress further as offshore groups continue to seek metro office assets to deploy capital, as investment-grade stock within the CBD remains limited.
"Market fundamentals for vendors continue to strengthen, with the Sydney-wide trend of constrained supply placing upward pressure on net effective rents,” the report advised.
Suburban peripheral markets are especially impacted by residential encroachment, heightening tenant activity as displaced tenants source alternative accommodation according to Colliers.
“Furthermore, investment in infrastructure and amenity has contributed to an uplift in rent and competition for space, especially within core metro markets such as Parramatta and North Sydney.
"Average A Grade yields for Sydney Metro have tightened by 47bps over the past 12 months to average 6.79 percent in March 2017, and the secondary market has experienced a tightening of 56bps to average a current yield of 7.74 percent.
"Taking into consideration market fundamentals and rental outlook, the purchasers of secondary metro assets will most likely be opportunistic, seeking value add opportunities,” the report stated.
Further compression of metro/office property is likely, Colliers says.
“Furthermore, the spread of 5.01 percent over the risk free rate for secondary assets suggests further significant compression is likely," it advised.
Metro office assets is still appealing to investors Colliers states.
"While metro markets have enjoyed above-average yield compression over the last six months, metro office assets still present an appealing case to investors, Coliers suggested, as the yield premium to CBD assets is currently 120bps.
"The recent offering in North Sydney of 116 Miller Street and 173 Pacific Highway (opposite the future Victoria Cross metro station) and Dexus’ Phillip Street development in Parramatta (pre-committed by the Department of Education for a 12 year term) should see the yield spread between CBD and metro assets narrow,” the report advised.
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Scarce supply of Sydney investment despite strong demand driving down metro yields: Colliers

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A number of positive factors are at play in the Newcastle office market according to valuation firm Herron Todd White in their April report, which puts the NSW city approaching the peak of the market position.
The January PCA Office Market Report has recorded an audited net absorption in the 12 months to January of 12,183 square metres.
This is the highest rate since 2009. The additional stock of 11,140 square metres in this time comes primarily in the form of 168 Parry Street and 18 Honeysuckle Drive. 
The developer at 18 Honeysuckle Drive is prepared to double down on the success of this mixed-use development on the harbour front site across the road.
The Newcastle Herald reports that the Hunter Development Corporation’s acting general manager Valentina Misevska said the concept for the 21 Honeysuckle Drive site was designed by Sydney firm SJB Architects and comprises three buildings with a mix of one, two and three-bedroom apartments, individual townhouses and some retail activation on the ground floor. It is understood the NLA provided in the Lee Wharf Stage 4 and 5 will be circa 22,000 square metres. 
Property Observer found office spaces advertised for lease at <a href="https://www.realcommercial.com.au/property-offices-nsw-newcastle-501202199" target="_blank">18 Honeysuckle Drive</a> through Colliers International. The office spaces belong to the Doma Group. The 6,500 sqm A-grade commercial office tower has four plates of  approximately 1,284 sqm to choose from.
<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/HTWNewcastle.jpg" alt="">
Office rents are in a relatively stable environment, with new stock and demand generally on par. We’re still seeing very strong owner-occupier interest from self managed super funds on the small to mid sized strata office market in the inner city and inner suburbs. Interest around the new Wickham transport interchange is particularly hot and values along the new light rail or where a retail outlet may be able to open out into the Honeysuckle Precinct from Hunter Street are also on a strong upward surge. 
"We have now entered a stage in the local office market where we are seeing very low yields and while interest rates remain low, the market may be able to sustain these. However when we see interest rates rise, so too will the yield expectations of the market," say HTW.
"Rental growth has not kept up with capital growth in the CBD and while direct vacancy rates across the total market sit at 8.5%, with a mooted 22,000 square metres potentially hitting the market in the short term, we may see macro and micro factors combine shortly to push office values down once the market peak has been breached."
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Newcastle office market enters low yield phase: HTW

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There are no suburbs that are at the peak of the market for the office market, according to Herron Todd White’s latest report.
The property valuation firm says that this shows that there has been no change in the office market since last month.
<a href="https://www.propertyobserver.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%201.20.28%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/2017/05/03/Screen%20Shot%202017-05-03%20at%201.20.28%20pm.jpg" alt="">
Melbourne and Coffs Harbour continues to be approaching the peak of its market with Adelaide, Darwin, South East NSW, Townsville and Wide Bay at the bottom of the market.
Meanwhile Alice Springs, Gippsland, Newcastle and Toowoomba’s office market is starting to decline.
Last month Property Observer reported on the office market and that several suburbs are on the way to the top.
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No changes in office property market clock: May HTW clock

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Contraction has been the underlying theme in Adelaide’s office market in the past 12 months and the large vacancies created by multi-national tenants have caused a ripple effect down into the below $10 million market, according to valuation firm Herron Todd White’s latest April update.
Not surprisingly, Adelaide is at the bottom of the market cycle in HTW’s commercial property clock for offices.
Over the past 12 to 24 months, the downturn in business activity throughout South Australia has created vacancies with the likes of Santos, BHP and Telstra all contracting their tenancies into smaller, compact areas. 
Investment activity within prime assets that provide secure lease covenants and long WALEs is expected to remain strong over the next 12 months. 
“Similarly, we don’t anticipate there being a significant change to the risk-averse pricing of lesser quality assets being 30% to 40% below prime assets,” say HTW.
However, the construction phase in the CBD office market is coming to an end. There are a few major projects due to in the short to medium term: 
<ul>
<li>
<a href="https://www.realcommercial.com.au/property-offices-sa-adelaide-501486447" target="_blank">Frome Flinders office building</a> is now finished and part occupied by Grant Thornton. </li>
</ul>
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<ul>
<li>113-115 King William Street, Adelaide’s sixth tallest building at 25 levels and 5,799 square metres.  </li>
</ul>
The completion of these building has contributed to the increase in Adelaide total vacancy to 16.2% from 15.4% in January 2017. 
There are analysts reporting that the contraction of space has slowed and with the limited planned addition of space, that vacancy will contract over the next 12 months. 
When you break down the vacancy rate, the majority sits in lower grades. 
<a href="https://www.propertyobserver.com.au/images/2017/04/21/AdelaideMktSummary.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/04/21/AdelaideMktSummary.png" alt=""> 
 <img src="https://www.urban.com.au/images/2017/04/21/AdelaideOfficeGrade.png" alt="">
“We consider that a period of rejuvenation will begin, however this is unlikely to result in significant new office space in the short term. As it starts it will take lower grade buildings off the market and place downward pressure on the vacancy rate,” say HTW.
There also exists the possibility of buildings being converted to residential accommodation. A number of residential developments will soon be competed which will increase the number of units in the market. The depth of this unit market may be tested and likely to delay future conversion of any obsolete office buildings. 
There is however a sense that the period of high vacancy may be beginning to end, concludes HTW.
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Adelaide office market undergoing contraction: HTW

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No discussion on office market is complete without taking stock of the Sydney office market.
Since the start of 2017, the Sydney CBD office market has continued its market movement trend of 2016, with a decrease in both vacancy rates and incentives and an increase in average market rental rates, according to valuation firm Herron Todd White’s April office market report. 
Sydney is a rising market on HTW’s office property clock.
<a href="https://www.propertyobserver.com.au/images/2017/05/09/Screen%20Shot%202017-05-09%20at%2012.12.57%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/09/Screen%20Shot%202017-05-09%20at%2012.12.57%20PM.png" alt="">
Due to the results of strong employment growth, especially in the office jobs created throughout 2016, which drives the absorption of office space, combined with additional ongoing absorption of office stock, under supply and rising rentals, we expect to see demand for commercial offices remaining strong, yields continuing to trend lower and steady vacancy rates throughout 2017. 
The Sydney metro office market vacancy rate currently stands at 6.2%, remaining the lowest of all capital cities, according to Property Council research paper dated 2 February 2017, thus reflecting the inherent strength in the Sydney market. 
An attributing factor to the compression in vacancy rates and growth in associated market rates is the commencement of the Sydney Metro Project, developing 31 new metro stations linking to Rouse Hill in the north-west through to the CBD and extending to Bankstown in the south-west. Further to this, the acquisition of secondary commercial office buildings by large-scale developers for residential or hotel conversion has further pressured the marketplace. 
“We note these acquisitions have led to the displacement of owner occupiers and tenants alike, now all in the market for available commercial office space, thus further pressuring the secondary office markets of North Sydney, Chatswood, St Leonards, Macquarie Park and Parramatta,” say HTW.
“We consider the Sydney office market to remain relatively stable in the short to mid-term, with the Property Council of Australia forecasting stable vacancy rates over the six months from January 2017.” 
An example of a recent listing was that of the iconic Australian Exchange Centre, home of the ASX, with price expectations of more than $325 million. The expressions of interest campaign closes on April 27.
The listing of the building at 20 Bridge Street in the heart of Sydney’s financial district makes it the first institutional grade Sydney CBD core offering since June 2013.
<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/SydExchangeCenter.jpg" alt="">
Across the board, Sydney is continuing to experience yield compression in the commercial domain. 
“We note a heated residential market along with an inherently low cost of borrowing have seen yield compression across the office sector over the past 12 to 24 months, with a strong appetite on a micro and macro level for A grade Sydney offices on long-term lease covenants to blue chip tenants. 
“We would consider this trend to continue whilst supply remains relatively low.” 
With limited stock on the market for sale or lease, demand has pushed further out to fringe locations such as North Sydney, South Sydney, Chatswood and areas in the inner west. Notwithstanding this, “we consider rental growth to continue in line with demand and limited supply”. 
With the recent surge in purchases by owner- occupiers throughout the Sydney CBD office market, investors are cautioned that competition from this segment is forcing a tightening of yields. Investors should be wary of this market force when purchasing and avoid paying over market rates to compete with owner-occupiers who tend to be less reliant on yields. 
Further opportunities in emerging office markets may be present as the government focuses on increasing economic activity and development in outer Sydney suburbs. For example, the commercial centre of Liverpool is considered to benefit from the continued residential development in the south-west, proposed construction of the Badgerys Creek Airport and the possible extension of the Sydney Metro with a direct line from Bankstown to Liverpool, all of which will in time increase economic activity, employment viability and demand for commercial office assets. However, caution is drawn to the ability for emerging markets to withstand an economic or market downturn compared to established locales and other significant commercial hubs. 
Further opportunities within the commercial office market may be present in assets which are feasible for further subdivision. The rise of creative office suites, prevalent within the Southern Sydney office markets for example, has been driven by the demand for smaller assets catering to start-up companies with less capital that require lower priced assets or shorter or more flexible leasing terms. The increased focus on smaller companies has seen the rise of small scale business parks, sub-leasing sections of larger offices and the serviced office business model. Although smaller tenancy areas can derive greater returns due to the economies of scale principle, smaller offices tend to have increased risk due to the high turnover of tenants given shorter leasing terms. Caution may be drawn to the ability of an asset manager to derive adequate returns via minimising vacancy in addition to the aptitude to sustain a competitive asset within a market that could be easily saturated. 
While the outlook for Sydney’s office market is positive, as ever, caution as to the sustainability of current and projected office trends is recommended with road blocks to growth possible, including the very real and significant potential for a downturn in the local and wider residential market which will have a major impact on the wider economy, potential stock market volatility after recent record gains and political instability (both national and international). 
 
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