The Sydney Morning Herald from Sydney, New South Wales, Australia • Page 47

The Sydney Morning Herald Saturday, February 4, 1995 47 r- COMMERCIAL INDUSTRIAL INVESTMENT The race is on to cross the Tasman PROPERTY mmm Ffef immmmm 11S1 Loans caution hits recovery By ATTILA FEKETE Although the last 12 months have witnessed sustained improvements across Sydney's property markets, the much heralded recovery has not as yet been reflected in rental growth or sustained capital expenditure in the business sector. There is also a concern among some industry experts that the property market recovery of last year was disproportionately higher than the rate of improvement as illustrated by economic market indicators. This concern is reflected by the attitude of most financial institutions, where reluctance to lend, particularly for commercial property investment, continues to hinder a broad based recovery. Due to lessons learned from the recessionary environment over the last few years, institutions and investment funds will increasingly request, and rely on consultancy, research, and advisory data before acquiring property. By KATHRYN HOUSE Commercial Property Editor A cross-Tasman rivalry has emerged in shopping centres throughout Australia and New Zealand, as major retailers in both countries launch plans to establish new empires by the end of the decade.

During the past two years many major Australian chains such as Katies and Just Jeans have made the jump across the Tasman and grabbed a significant slice of the New Zealand market. New Zealand retailers are starting to hit back, and a handful of operators have already established stores in Sydney, Melbourne and Surfers Paradise. The retail markets in the two countries have, until recently, remained surprisingly separate. But the Sydney retail leasing manager for Richard Ellis, Mr John Rooke, said that a "cross-fertilisation" had taken place during the past 12 months. One prime example was last year's opening of a new Auckland shopping centre, Atrium on Elliot.

The centre is anchored by 1 1 Australian retailers, many making their first appearance in New Zealand. A similar offensive is taking place on Australian shores, led by New Zealand-based fashion chains such as Action Down-under and Bonz. "There are a large number of mainstream Australian retailers who will go into New Zealand in the next two or three years and likewise a large number of New Zealand retailers who will be targeting our market," Mr Rooke said. "We would have six well-established, well-performing New Zealand retailers who are looking to establish more stores or their first store in Australia. "By and large there is a perception now from both countries that there is a market that both could avail themselves of." The Australian shift into New Zealand can be traced back five years to the launch of the first Katies store in Auckland's pre- iti Attila Fekete -----fc-ffl Action Downunder was launched seven years ago, and has since become a leader in the casualsportswear field with its Rodd Gunn and Logan labels.

"We've always regarded Australian as a market we should be in because the two countries are really one market," Mr Gwynne said. "It has always been our intention to be an Australasian business rather than a New Zealand business." Mr Gwynne admits that there are hurdles to crossing the Tasman namely the disparity between Australian and New Zealand exchange rates and the fact that New Zealand has a Goods and Services Tax (GST). He also believes that Australian retail rents are "stupidly high" figures from Richard Ellis show that prime retail rents in Queen Street, Auckland, are about $1,440 a sq compared with prime rents in Pitt Street, Sydney, of $2,500 a sq to $4,400 a sq and that turnover on a shop-by-shop basis is more lucrative in New Zealand. But Mr Gwynne said the depth of Australia's market was a major attraction, as was the need to combat the Australian shift into New Zealand. "It's a defensive move as much as anything else," he said.

"If we New Zealand retailers are to survive, we have to be be Australasians ourselves it's a defensive move as well as an attack." The company's interest in Australia is shared by a number of other New Zealand retailers, including Thornton Hall and a Sportsgirl equivalent, Max. Chains already in Australian include Keith Matheson one of the first New Zealand groups to branch into Australia in 1988 with stores at Skygarden and in Oxford Street, Paddington. Others are and Ski, a fashion chain with one Australian store in Surfers Paradise, and Bonz, a retailer with three Sydney stores at The Rocks, at the Queen Victoria Building and in King Street. But the New Zealand move into Australia appears to be outweighed by the counter moves of Australian retailers such as Freedom Furniture. The Sydney-based homeware giant recently announced plans to anchor a new bulk retailing complex, Capital Gateway, near the Wellington CBD.

The 2,500 sq centre is due for completion in late 1995 or early 1996, with Freedom occupying more than 1 ,000 sq on the ground floor. Other chains said to be eyeing the market are fashion retailers Que, Network and Oxford Shop. Auckland's centre, Atrium on Elliot anchored by 11 Australian retailers. Hudson Avenue, CASTLE HILL $137.75 sq gross SPC Ltd has leased 245 sq of office space Suite 1, 10 Hudson Avenue, Castle Hill from Smiths Pty Ltd. The lease term is for four years with a three-year option.

Rent reviews are from year 3 at PI or 5 per cent. John Bryant, Leonard Oades Pty Ltd. Buckley St, MARRICKVILLE $81.61 sq gross Kitchens by Design has leased 223 sq at 14 Buckley Street, Marrickv ille from Mr Tzihas for $18,200 annual rental. The lease term for the freestanding factory is two years with a two-year option. James Bouteris (inner west office) Taylor Nicholas Property Consultants.

York Street, SYDNEY $220 sq gross Havenco Pty Ltd has leased 96 sq at Suite 1006, Level 10, 65 York Street, Sydney from James Hardie Industries Ltd. The commercial office space has been leased for three years with rent reviews to market. Chris Fisher, Raine Home International. Doody Street, ALEXANDRI A $388 sq gross Info-Fusion Pty Ltd has leased 30 sq of office space at 35 Doody Street, Alexandria from NEC (Constructions) Pty Ltd. The space included two undercover car spaces.

The gross rental is $10,144 a year. Bill Lynch of Davis Davis Property Consultants. Forest Road, IIL'RSTVILLE $390 sq gross Shan Hua Pty Ltd has leased a prime 80 sq retail shop from L. Stanovski at Forest Road, Hurstville. The lease term is for two years with a four-year option.

Annual increments are CPI with a review to market at end of year two. Lino Parrottino, Richardson Wrench Hurstville Commercial. Foundry Road, SEVEN HILLS $64.14 sq gross Architectural Joinery Pty Ltd has leased 343 sq of industrial factory space at 11-13 Foundry Road, Seven Hills from Stazzy Pty Ltd. The lease term is for two years with a one-year option. The annual rent is $22,000 gross and reviews annually to the greater of CPI or 5 per cent.

Graeme Scott Bawdens Industrial. Arthur Street, NORTH SYDNEY $180 sq gross Skilled Engineering has leased 232 sq commercial space on Level 13, 140 Arthur Street, North Sydney from BCM Systems Pty Ltd. The term of the lease is for one year. Christine Falson, Colliers Jardine North Sydney. Crown Street, SURRY HILLS $315 sq gross Thai Orchid Restaurant has leased 628 Crown Street, Surry Hills, from G.A.G.

Pty Ltd. The rental is $35,400 a year gross. The lease is for two years with a three-year option rental is subject to annual CPI increases. Blake Kittle Pty Ltd. Kingsgrove Road, sq gross Phantom Zone Pty Ltd has leased a modern office warehouse unit at 9 192a Kingsgrove Road, Kingsgrove from United Developments Pty Ltd.

The lease is for three years with a three-year option. Frank Kelly, Greenland Kelly Associates. mier shopping strip, Queen Street. The fashion chain's general manager, Mr Peter Shepperd, said the opening was in response to the large number of New Zealand clients who had visited Katies in Australia. The chain has snared a large share of the local market, with 18 stores and another three due to open within three months.

"It was a fairly protected market that responded well to greater variety," Mr Shepperd said, adding that New Zealand shoppers had a perception that Australian goods were of a higher quality. "We're very happy with what we've managed to For investors, the focus is gradually returning to commercial property. Over the past 12 months the economy has evidenced sustained growth particularly in the manufacturing and service industries. "Unemployment levels for white- and blue-collar workers is decreasing. Largely driven by these factors, investors will chase undercapitalised property, with commercialoffice property investments becoming increasingly popular, particularly where tenant covenant is strong and the income stream guaranteed.

Retail property market investment, particularly within major suburban shopping centres, has been popular over the last two and half years. There is a generally held belief that investment yields and rental growth in the retail sector will plateau and further growth will be achieved mainly through expansion. Investors and developers have begun to recognise that an undersupply of premium and A Grade office accommodation in Sydney's CBD is unavoidable. Armed with the knowledge that it will take, on average, three years to build an office building, and with steadily diminishing vacancies, particularly in A grade and premium space, it is inevitable that the Sydney office market will be in undersupply in these categories by 1996. Over the next three years the majority of Australia's capital cities will experience similar premium grade office shortages.

Commercial leases signed in the mid to late 1980s will be affected by this shortage of office space as leases expire and occupancy needs increase through business expansion. This will have the anticipated result of increasing rentals. The pendulum of supply and demand always overswings and the phase we are now entering will provide marvellous opportunities for those who can create new stock. Attila Fekete is a director, sales division, of Jones Lang Wootton. achieve there in terms of market share and profitability." Mr Shepperd said Katies had caught its New Zealand competitors "on the being the, first Australian fashion retailer to target the market.

"But they've lifted their game and are defending their territory fairly well," he said. Katies has been followed into New Zealand by a growing number of Australian retailers, particularly since the opening of Atrium on Elliot. The centre was developed by the Hong Kong-based Perfect Match Ltd, owner of New Zealand's Centra Hotel. The marketing campaign for tenants was co-ordinated by the Australian and New Zealand branches of Richard Ellis, and the resultant mix is distinctly Australian. Sportsgirl is one of the most prominent Australian retailers, with a 700 sq store over two levels.

Other major tenants include Port-mans, E)ymocks, Ken Done, Aveda Cosmetics, Global FX, Oshkosh B'Gosh, Perri Cutten, Portmans, Done Art and Designs, Fiorelli and Surf Dive 'N Ski. The franchised Dymocks outlet is the company's flagship store in New Zealand, challenging Mr Graeme Hart's Whitcoull's group. Dymocks's managing director, Mr Ken Terry, said the company was planning to establish a chain of stores in New Zealand's key shopping centres and towns. He linked the Australian retail shift into New Zealand with the increasingly limited opportunities for many of the larger retailers such as Dymocks, which had 72 stores throughout Australia. "Australian retailers have been very busy with their expansion in shopping centres in Australia and only recently the market seems to have become saturated," he said.

New Zealand retailers appear to have a similar view of the Australian market. One of the more aggressive new entries is Action Downunder, a leading New Zealand menswear chain, which opened its first outlet in Melbourne last year. The managing director, Mr Gary wynne, said the company planned to open a chain of stores throughout Australia, eclipsing the seven stores operated in New Zealand. Mr Gwynne said a store would open in Sydney within the next 12 months. The company is said to be looking at a number of possible locations including the Argyle Centre at The Rocks, which has been mooted for redevelopment j.

2SS -a 1 planning an assault on New Zealand. Dymocks ALEXANDRIA. A aDDroved site for 1 8 2 units Sought after tree lined St. REDFERN EAST A. aporoved site for 4 lux 3 br tees Finished Droduct would sell for S400K eacn.

First Network 565 1 888 ANNANOALE. ESTATE 113 PAR RAM ATT A RO Large shoo and residence in orime Dosition. near Dusv Johnston St. bus stoo at door. Renovate to suit vour needs Safe investment Must be sold to finalise estate.

Auction on site Sat 18 FeD at 10 a.m. TAYLORS Petersham. 560 7777 FOR AUCTION fflttdtfiiwanlK COMMERCIAL, INDUSTRIAL INVESTMENT PROPERTY ARNDELLPARK (Huntingwood) Highway Frontage LAND 4 35Ha (10 76 Acres) BANK SAYS SELL Exclusive Agent NATIONAL INDUSTRIAL REALTY 6096111 AH 018240 188 Annnnn F- Mrn mm in in I I BALM AIN $1 70.000 SHOP 22 so Oooosite Sat markets Excellent location. Rent $270 o.w. 015 261 090.

CITY FRINGE S420.000 NEG WAREHOUSELIVING City Fringe Realty PL 564 3117 lilii I ACROSS THE NATION AROl'NO THE WORLD mi iMBrn 2ND MARCH '95 ii ii Fir; mmt Mm FOR 5 lr offered i 4T 1L 90-122 KING STREET GAZEBO HOTEL PARRAMATTA AUCTION lots 143 Blaikie Road (0(1 Mulgoa Road) Penrith 48 QUEEN STREET 3 'SUBSTANTIA! -RETAIL BUCLOINGvS TO OCCUPY OR REDEVELOP, Prime "Special Industry" Sites loM-6775nf Lot 3 6001 Angus Robertson Strata Offices in Chatswood Outstanding exposure 500 metres from f.M Net to Camcrje'is Casn Carry and Wesfi Timrjers Zoned tor v.arer!ouse transport. buiKyqoods Oistrioution AUCTION: Tues Feo 14 95. 10 am. Svonev Citv Rooms CONTACT: Paul Kennedy 116 Hunter Street Newcastle Prime CBD location ST. RETAIL Approximately 165 sq.

m. air-conditioned premises vith 11 SOLD 4 LEFT Attractively presented building New foyer. Modern building. 1 12m- to 662m- 30 car spaces. Located on the mall.

8 suites available. Good natural II Total site area: 3,1 10nv II Prime position (near R.F.A.H. and University). TO BE OFFERED IN ONE LINE THEN (IF NOT SOLD) SEPARATELY AUCTION: Tuesday, 14th March, 1995 VENUE: 'Auction Centre' Raine Home House, 5 Harrington St, Sydney. Auctioneers: Raine Home Pty Ltd Nick Drake Geoff Coggins 25 mins to Sydney on-site parking.

i 10 mins to To be sold vacant possession Floor area 1 200m2 (approx) Current rental $144,224 p.a. Excellent investment opportunity. Contact: Sales Investment Department John McGrath A.H. (049) 46 7460 Brookvale Colin Meares (02) 957 3922 Andrew Callaghan (02) 939 6788 Stanton HJ1 Pater ALEXANDRIA Studio Warehouse 300 sum. freestanding, older stvie factory, suitaole for light industrial uses or live-m studio warehouse- Auction 23rd Feoru-arv.

1995 Contact Tim Cassidv 01 261 746 251 2622 SSES DR A KI Contact: David Wallace Mobile: 018 249 153 02 954 3330 i 1 l. I I I IV I II I 111 IK BRIDGE 32 Walker St, Nth Sydney 2060 (02) 369 2274 (o2) 233 2244 1 HI si mj mKmmmmnBtmKmmKaaaatMmaBUimmimmmmmamam TMA PW19- 1'95 in i i rw- 0Mb L4 1 1 Jl ACROSS THE NATION AROl'ND THE WORIJ) ACROSS THE NATION AROl'ND THE WORLD ACROSS THE NATION AROUND THE WORLD If! If a ACROSS THE NATION AROl'ND THE WORLD PYR-V-OIXIU DE SOLD SBWtfE ACROSS THE NATION AROl'ND THE WORLD VJ LJ VJ WUli JU 71-73 LITIIGOUJ STHEET ATTENTION: OWNER OCCUPIERS i il t.ii "9 to MARYS a f7CYD 127 129 MURRAY STREET 2 single storey terraces ii i. mi in hi hi i 1 it i Adjacent Darling HarbourNovotel ud nJLX-J 44-54 Princes Highway, Dapto 5 Modern shops 1 C0 leased 2 Long term Government tenants 4 Excellent main road corner location Ample on-site parking Net income $305,999 p.a. (approx) Modern 3 storey office building Recently refurbished N.L.A. 852 sq.m.

2 floors vacant 1 floor leased at $50,000 p.a. gross Parking min. 8 vehicles Site area 234m2 approx Zoned BusinessResidential Ui I rUCIi I 6000m2 CL0SG Yard aPProx 2-2SHa Under instruction from NSW Department of Housing j295 i-ormer neavy To be offered in one line with Vacant Possession engineenngsione 3 cutting facility Medium density zoning Suit subdivision, townhouse, villa or unit development Close proximity to Macquarie Shopping Centre University Stone cutting equipment can be included in sale For further details contact Industrial Department Stuart Vaughan (AH) 041 110 5020 For further details contact Sales Department John Bruton (AH) 9999 4724 Contact: Co-Agent: Geoff Jones Sales Department Martin Morris Jones Richard Garland (042) 29 5555 AH 9997 3096 Contact: Sales Department Lindsay Sturrock (AH) 968 4291 Contact: Sales Department John Bruton (AH) 9999 4724 I7'tfir illit.li 111 -nil. I II ii linn 'I I II I II mi ill. I I I I I I I nil I nil.