CBD Assets
The office market is at an inflection point, with modest price rises possible this year for the nation’s best CBD towers. That forecast comes after two years of heavy going in the sector, as high interest rates, business uncertainty and flexible working trends weakened demand for space. Demand for high-quality assets, combined with potential easing of interest rates, may support values in these segments as businesses seek well-located, modern workspaces.
It is anticipated that office cap rates will compress by 100 basis points through the upcoming cycle, with Sydney – particularly the core precinct – the first to observe cap rate tightening in this cycle. The other critical factor is rental growth. That is running at about 5 per cent at face value, although that is offset by incentives – such as rent-free periods or sponsored office fit-outs – which are around 45-48 per cent of rents charged.
Multi-tenancy Buildings
A multi-tenant property is a property that has two or more tenants. Compared to single tenant properties, multi-tenant properties can be more management intensive and may have less predictable cash flow. Multi-tenant assets may also have a shorter lease than single tenant properties. However, compared to single-tenant properties which are often purpose built for a particular tenant, multi-tenant properties may be considered more standard real estate which is easier to re-lease due to its non-specialized configuration and architectural features. Multi-tenant properties are also not subject to “all or none” occupancy as it the case with single-tenant properties.
A multi-tenant lease is a rental agreement between a lessor and several lessees in a larger, multi-unit property. However, it’s also common for lessors to rent out each unit in a multi-tenant property individually to a single tenant via a gross or net lease. The strongest multi-tenant investment properties consist of a diversified portfolio of reliable tenants offering consumer staples in a prime location.
Portfolio assessments
Lewis Valuations + Advisory have multi-property portfolio valuation capabilities and can provide appraisals for acquisitions, refinancing, internal uses, and estate purposes. Some portfolios comprise both direct interests in high quality office properties around Australia plus diversification in other assets. These portfolios of properties are actively managed to generate regular income and teh potential for capital growth over the long term. External independent valuations can provide estimated increase or decrease on book values across the portfolio and development assets. This asset class can be driven by higher capitalisation rates and discount rates, partially offset by market rental growth.
Rental assessments
We can provide rental valuations for various essential reasons, including landlords’ insurance, tax reporting, offsetting capital gains tax, and determining the market rental value. Rental assessments are a crucial aspect of managing commercial properties, ensuring landlords and tenants maintain fair and market-aligned lease terms. In Australia, where the commercial property market is dynamic and diverse, accurate rental assessments can significantly impact investment returns and business stability. For office spaces, rental assessments consider factors like amenities, location, and corporate demand within business hubs.