» commercial office space

What’s happening in the commercial property market

BMT team — Tue, 22 Oct 2019 22:24:48 +0000

Most of the published information about commercial real estate relates to the highly visible ‘prime’ end of the market, but sometimes this gives a distorted view of the market. It’s important to consult trusted real estate agents to reveal the data associated with the less examined small and medium size market. Commercial real estate agents closely monitor market activity, as well as legislative changes and expert analysis to track responses to market conditions, like fluctuation in rental prices. The rent a property can command closely determines the value of commercial real estate, much more than with residential properties. Here’s a glimpse, from the perspective of rental asking prices at what’s happening and why in the Australian commercial real estate market. National market overview Major markets Office, Retail and Industrial National market overview The Australian commercial property market is made up of three major city markets – Melbourne, Sydney and Brisbane. These cities account for the lion’s share of the national commercial real estate industry. In the current market, there’s no shortage of events influencing sentiment towards commercial real estate. The three major metropolitan markets act in unison, responding and reacting in real-time to many local, national and international events as they hit the news. Commercial real estate has experienced cyclical highs and lows, lasting two years between property highs. National asking rent increases peaked in early 2017 at very high levels then trended downwards through to May this year when price increases have again shown signs of increasing in recent months. Major markets Sydney has experienced several peaks and troughs throughout the past few years. These cycles have lasted approximately 10 to 14 months between peaks. While Sydney’s commercial real estate rent rises sailed through previous national elections unfazed, this year was different. Sydney office rents dropped prior to the federal election and have since shown a rise in the months following. Melbourne and Brisbane are not synchronised with Sydney. Melbourne rent increases followed with a slow and graceful decline. However, there has been an upswing in lease prices since the middle of 2018. While Brisbane rents have managed only increases of 1 per cent every three months at best. Office, Retail and Industrial Office asking rent increases have been in what stockbrokers would call a ‘trading range’ for many years, starting in January 2017 with a slow declining peak over each of the last three successive cycles. Recently, there have been signs of a breakout from the trading range. Retail rents paint an interesting picture. The retail market was on the decline for quite some time. Since July 2018, retail rents have shown an increase, despite the gloom portrayed by some of the media. In comparison, the industrial property market has been travelling well and has enjoyed reasonably stable rent growth over the last five years. Commercial real estate properties are valued based on the revenue they can generate. The change in rent not only affects what the tenant pays, but also the value of the landlord’s asset. To keep updated on the commercial property outlook, check out Commercial Property Guide’s Asking Price Index. The Index brings together hundreds of commercial real estate agent opinions about the future direction of commercial real estate price movements. It measures the change in sentiment of experienced and expert agents on the future direction of commercial property prices. Article by Commercial Property Guide

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Is co-working the future of the workplace?

BMT team — Wed, 18 Sep 2019 07:10:22 +0000

In 2019 technology is like a new religion. Users are relentlessly wired in and logged on, consuming terabytes of data on devices small enough to slip into their pockets. Wi-Fi is omnipresent, catering to our every need and keeping us connected. It’s changed the way we live, from retail and transportation to communication and relationships. It’s unsurprising then that the power of technology has changed the way we work. The fast pace of new technologies, automation and industrial shifts has seen developments in the types of work we engage in. We’ve seen the emergence of the ‘gig economy’, characterised by short-term, temporary work contracts, and a notable shift in working arrangements to meet the demands of a millennial workforce. With cloud-based software and smart technology, a growing number of workers are ditching the traditional nine-to-five work week for a more flexible, remote based roster. What are co-working spaces? Co-working spaces, also known as flexible office spaces, are tapping into this changing work dynamic. Co-working refers to a shared space where multiple businesses work while operating separately. Essentially, your office becomes a hub for businesses, entrepreneurs, creators and freelancers. Coworking spaces offer flexible leasing options, so tenants can rent a desk once or twice a week, a dedicated space that’s accessible 24/7 or a private office for a five-year period depending on their needs. According to a report in the Sydney Morning Herald, the number of co-working spaces has risen from about 78 sites six years ago to more than 400 in Australia’s two main capital cities. The obvious space and cost efficiencies of co-working spaces are also driving growth and present landlords with ample opportunity to capitalise on what would otherwise be unused floorspace. Shared office spaces represent the evolution of the workplace and experts are predicting significant growth in the coming years. With this in mind, we delve into co-working and why it’s worth considering for your commercial property. How to create a co-working space Modernising your office space can seem like an overwhelming and expensive task but it’s actually very simple and can save you thousands in the long term. As we’ve mentioned, the days of cubicle offices with harsh artificial lighting are long gone. Modern employees want a space that’s open and flexible so your property should support free communication, movement and unhindered productivity. To create a co-working space, you may need to knock down a few walls to open up the area. Having an open plan floorspace will allow you to create a hot-desking environment and allow plenty of natural light to enter the interior. It will also make any future remodelling a quick and easy process. Once you’ve implemented the open plan design, it’s time to incorporate modern technology. This can include equipment like USB charging stations, laptop docks, hard drives, smartboards and video conference gear. Technology is an integral part of our working lives so it’s essential to have updated technology in your office. Another hallmark of a good co-working space is a ‘hang-out’ area where workers can take a break and network with others. This can be anything from a space with lounges and televisions to an in-house café, depending on the scale of the building. While this all sounds costly, there’s a way to reduce the expenses involved in upgrading your property. It’s called property depreciation. Depreciation for an office space As a building and its assets age, they depreciate in value. The Australian Taxation Office (ATO) legislation allows owners of income producing properties to claim deductions for this wear and tear. In any commercial property, the owner of the building can claim capital works deductions for structural assets as well as depreciation deductions for any of the plant and equipment assets or fit-out they own in the property. For most commercial buildings capital works deductions can only be claimed if the property commenced construction after the 20th of July 1982. Plant and equipment assets, on the other hand, are calculated based on the individual effective life of each item as set by the ATO. If you upgrade your office building to a co-working space by renovating or installing a new fit out, you can claim depreciation deductions. You may also be eligible to claim scrapping deductions. Scrapping applies when removed assets and structural elements within a building have a remaining un-deducted value. At the time of removal, the owner of the structure or asset can claim the remaining depreciable value as an immediate deduction in that same financial year. It’s important to note that tenants can also claim depreciation on any fit-out they add from the starting date of their lease. If a tenant removes items at the end of their tenancy, they may also be able to claim any remaining depreciation for assets that are removed and scrapped when they vacate the premise. A fit-out installed by tenants can also be structural in nature and can therefore be claimed as capital works deductions. Small to medium business owners may also be eligible to claim concessions under the instant asset write-off rules. To learn more, read Instant asset write-off increased to $150,000 until 31 December 2020. To find out more about how depreciation deductions can help you if you own a co-working space, Request a Quote or contact the expert team at BMT Tax Depreciation on 1300 728 726.

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Commercial office update

BMT team — Tue, 26 Feb 2019 21:58:37 +0000

As summer draws to a close and people have returned to work, we’ve taken a look at what’s happening with the commercial office sector across Australia. Office vacancies rates The Property Council of Australia (PCA) February release of the 2019 Office Market Update, reports that office vacancies have tightened in metropolitan cities across Australia, with Sydney and Melbourne now at incredibly low levels. Overall, Australian office vacancy fell by 0.7 per cent in the six months to January 2019 to 8.5 per cent. The tightest markets are the Melbourne CBD, where the vacancy rate fell to 3.2 per cent (down from 3.6 per cent) and the Sydney CBD, which dropped to 4.1 per cent (down from 4.6 per cent). They were accompanied by falls in all capital cities other than Hobart. The PCA report states that both markets have strong economic fundamentals. However, the Melbourne CBD has seen strong supply of new office space and demand for that space. In the Sydney CBD the combination of a net withdrawal of office space and a tight market has left demand nowhere to grow. An additional 98,758 square metre of supply was added to the Melbourne CBD over the last six months compared to a 28,212 square metre increase in Sydney CBD. Predictions indicate, Melbourne will account for half of the additional one million square metres of office space coming onto the Australia’s CBD markets over the next three years. With the exception of Hobart, across the rest of Australia there has been a decrease in office vacancy rates in all capital city markets: Hobart 5.9 per cent (previously 5.8 per cent) Canberra 11 per cent (down from 12.4 per cent) Brisbane 13 per cent (down from 14.7 per cent) Adelaide 14.2 per cent (previously 14.7 per cent) Darwin 17.2 per cent (down from 21.6 per cent) Perth 18.5 per cent (down from 19.4 per cent) Net tenant demand has increased in both CBD and non-CBD markets, with positive demand in CBD markets for the ninth consecutive period. The national CBD office market vacancy rate fell to 8.3 per cent (down from 9.1 per cent in the previous period) which is its lowest level since January 2013. The office market vacancy rate in non-CBD markets also fell slightly to 9.1 per cent (down from 9.2 per cent in the previous period). New South Wales and Victoria had the top ten best performing non-CBD markets: Parramatta, East Melbourne, Macquarie Park, Crows Nest/St Leonards, Chatswood, St Kilda Road, North Sydney, Newcastle, Wollongong and Southbank, whilst the Sunshine Coast, West Perth and Brisbane Fringe have the highest non-CBD vacancy. Net absorption was 159,092 square metres during the six months to January 2019, which is on par with the historical average of 158,614 square metres. 243,436 square meters of office space was added during the six months to January 2019. The PCA ‘Office Market Update’ highlights almost one million square metres of office space will be added to Australian CBD markets over the next three years, with half of this new space being supplied to the Melbourne market, which will grow by more than 10 per cent of its current stock. The Sydney CBD will see an extra 4 per cent of current stock added through to 2021, followed by Brisbane CBD (4.4 per cent), Canberra (3.2 per cent) and Adelaide (5.1 per cent).

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