The stronger leasing markets have led to an increase in landlords Growthpoint and Cromwell Corp’s tenants profiles across Melbourne and Sydney.
Growthpoint Properties Australia has undertaken 28,323 square metres of leasing since the release of its half-year results in February 2017, including a 26,517 sqm logistics warehouse at 120 Link Road, Melbourne Airport to The Workwear Group, part of the Wesfarmers empire, for 10 years.
The swathe of new deals, with asset sales in Queensland, has boosted Growthpoint’s total portfolio occupancy, as at March 31, to 98 per cent, with 2.5 per cent vacancy in the office portfolio and 0.3 per cent in industrial.
Growthpoint currently has only 7 per cent of its leases, by income, potentially expiring over the next 24 months.
Growthpoint’s head of property, Michael Green, said the company would continue to act with “immediacy, and in advance of potential expiries, to lease up vacant space within its portfolio”.
According to Cushman & Wakefield, with effective rents trading at a significant discount to Sydney, Melbourne stands as an attractive proposition for companies looking to enter Australia.
“In the year ahead, a decline in the vacancy rate is expected to support strong rental growth, however as the next development cycle draws closer this growth can be expected to slow,” C&W’s research says.
In Sydney, Cromwell Property Group has secured two big-name retailers as long-term anchor tenants at its flagship $130 million Northpoint redevelopment.
Woolworths and Olympus Medical Centre have been quick to sign on for space in the integrated three-level retail facade.
Due for completion in 2018, the precinct will create a shopping, dining and lifestyle hub on the North Shore.
Damian Horton, Cromwell head of property, said the recent leases were an “exciting milestone” for the Northpoint redevelopment project, which is considered a central catalyst for North Sydney’s rejuvenation.
“The tenants are a perfect fit for a building that will become a hub for office workers and local residents. We are excited to be making a significant contribution to the North Sydney Council’s vision for the area,” Mr Horton said.
Cromwell has signed a 10-year lease with Woolworths to commence in mid-2018, securing the supermarket’s first store in North Sydney, while Olympus Medical Centre has signed a 10-year lease for 724 sqm on the ground level.
“With landlord-favourable conditions firmly established, existing tenants are expected to prioritise lease extensions and those with the flexibility to hand back excess space are likely to do so. Service sector employment growth, and anticipated negative net supply in 2017 and 2018, are expected to maintain landlord-favourable market characteristics,” C&W research says.