Weekly Update 18/10/2021

18 October 2021

Welcome to this week’s Property News.

The week saw the continuation of a string of major shopping centre transactions with Lendlease selling stakes in Harbour Town to Vicinity and of Northgate Shopping Centre to Primewest, however the bigger news of the week was with LOGOS who together with Abu Dhabi Investment Authority and Australian Super acquired the QANTAS Mascot portfolio for $802m, capping off a big week of transactions, topping $2.2bn.

The merger last month of ESR and ARA was bound to bring some further consolidation moves across the Group and this week, ESR’s REIT agreed terms to take over the ARA LOGOS Logistics Trust to create a S$5.4bn listed REIT to better position the REIT to take advantages of the rapid rise of e-commerce, digital transformation and the financialisaton of real estate. The enlarged REIT will hold 87 Portfolio Properties (including 20 in Australia) and 41 Fund Properties in Australia held through fund investments.

Question marks remain on the office sector and the degree to which it will be bounce back following the lifting of restrictions in Sydney and Melbourne. Surprisingly, JLL’s recent vacancy report showed positive net absorption of 70,100 sqm was recorded over 3Q21 – the strongest quarterly result since 4Q 2018. Five of the six monitored CBD office markets recorded positive net absorption in Q3, though the national CBD office market vacancy rate remained at 14.0% in 3Q21 due to increased supply.

JLL expects that whilst some organisations may reduce their occupational footprint as they work in a more flexible manner, the most important factor for office sector demand is headcount growth. The news here is looking good with hiring intentions looking strong. The NAB Business Survey released this week showed Business confidence rebounded strongly in September to be well above its long-run average.

We therefore expect Prime Office assets to find strong support from global capital seeking a defensive position against potential inflation. This is good for Dexus and others who have recently listed large office assets. The Group are expected to shortlist a buyer for 12 Creek Street Brisbane and have listed 4 other assets including;

  • 309-321 Kent St, Sydney (50%)
  • 383 Kent St, Sydney (100%),
  • 100-130 Harris St, Pyrmont (100%)
  • 130 George St Parramatta (100%)


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