Raine & Horne Commercial

ACT - Canberra Across the ACT, retail and industrial properties are yielding 5.5-6.5% on average, while office property yields range from 5.0-6.0% based on A grade assets with a 10-year-plus weighted average lease expiry (WALE). Michael Ceacis Executive Director of Commercial ACT expects retail yields to rise. He says, “demand for retail assets is expected to drop due to the COVID-19 impact on tenants. We expect yields to increase to 6.0-7.0% due to uncertainty and weak demand.” Yields on office and industrial property are expected to remain stable, reflecting strong demand. That said, Michael notes that, “office assets with WALE of five years or longer, with AAA rated tenants are highly sought-after by investors including institutional investors.” Across the ACT, vacancy levels are low, ranging from 6.0% on industrial stock, to 8.0% and 10.1% for retail and office assets respectively. In terms of the impact of COVID-19, Michael says, “although Canberra has fared much better than the rest of the country, all retailers have been affected due to government trading restrictions. The office asset class has been impacted greatly with less than 30% of office space being utilised across the board and staff working from home. This has also had an impact on the retailers.” As in so many other parts of Australia, the ACT’s industrial property market has been less affected by the pandemic. A number of outstanding sale and lease results have been achieved by the Commercial ACT team including the $15.3 million sale of a 4,049 square metre retail property at 5 Tennant Street, Fyshwick. The building has a Commonwealth covenant occupying 79% and a strong 6.8 year WALE by income. In addition, 1,300 square metres of office space at 50 Blackall Street, Barton were leased on a 7 year lease to the Commonwealth of Australia. A further 1,000 square metres of office space at 4 Mort Street, Canberra City were leased on a short term basis to the Commonwealth. 10 - Michael Ceacis mceacis@rhccanberra.com.au