Momentum in the Canberra commercial market tipped to continue

Spring traditionally brings forth a burst of business enthusiasm as optimism rises in line with temperatures.

But with a federal election just held and the ACT vote on the horizon, how do the more pragmatic leaders in the commercial office sector think the property market will perform between now and the end of the year?

JLL head of sales and investments, Michael Heather, says strong demand is expected to continue for long-leased, government-tenanted buildings for the remainder of the year.

“We’re currently marketing the Finlay Crisp centre and have been getting a great response from that,” he says.

Mr Heather says Canberra’s centre of government credentials have put it in the spotlight and into the calculations of investors.

“Canberra is seen as a desirable investment destination by national and international investors and there are a number of very active buyers in the market.”

Knight Frank associate director Nic Purdue says they were “very positive” on the market – sales and leasing – until the end of the year and into 2017.

“Investors beyond Canberra seemed to cotton on about 18 months ago that the market dynamics really stack up,” he says.

“But as far as new activity is concerned, unless buildings come to market in the next few weeks, we’re unlikely to see any new offerings until around February.”

Laing + Simmons managing director Alex Smith says spring won’t impact developers.

“… but the combination of interest rates dropping and the federal election now out of the way, that should encourage investors to get active,” he says.

“The best thing that could happen in the ACT election would be the abolishment of the change of use charge which would stimulate the redevelopment of many old buildings in our CBD.

“At the moment the development focus is on higher density in outlying town centres while leaving the CBD to deteriorate,” Mr Smith says.

Colliers’ national director capital markets, Tim Mutton, says with the federal election determined, business was settling back to its agenda.

“We’ve got several major sales campaigns beginning in the next three weeks or so,” he says.

“These are not just CBD-focused, but spread throughout all major centres.”

Mr Mutton said leasing inquiries were also strong.

“We’re seeing a tightening in A-grade stock and that’s going to impact rent as available space shrinks,” he says.

“There’s a lot of momentum in the market and we see that continuing until year’s end.”