Capital Markets Investment Review 2021 OFFICE

ANZ CAPITAL MARKETS | INVESTMENT REVIEW 2021
Office
2021AUSTRALIA & NEW ZEALAND
Investment Review
1
COLLIERS INTERNATIONAL
Australian property investment markets witnessed major While we have seen lower sales volumes during the second and third quarters while
vendors and purchasers assessed their positions, there was an improvement in sales
disruption as a result of the COVID-19 pandemic during 2020. As
volumes in the last quarter. Metro office markets have been favored by investors and
the pandemic hit Australian shores, many major deals ground to a have accounted for a much larger proportion of the sales volumes than last year.
halt while investors and vendors assessed the impact the pandemic
While a certain level of restrictions will likely remain in place in 2021, the strong
would have on income, in the short term and longer term.
economic indicators and the vaccination roll-out are giving cause for optimism.
Introduction
2020 saw strong demand for low risk assets with long leases in place. There is a strong weight of capital
looking for opportunities in the Australian property market which we expect will boost sales volumes
beyond the level we have seen in 2020.
Introduction | Key Findings | The V Shaped Recover | Major Transaction Overview | NZ Overview | Debt Advisory | Valuation Outlook | Investment Outlook | Transactions 2020 | Authors/Teams 2
Source of Capital
GERMANY
% OF TOTAL INVESTMENT $811m
Australia 37.7%
Singapore 21.7%
China 17.3% USA

JAPAN
$859.5m UK
CHINA
USA 8.6% $300m $72m
$1.72b
Germany 8.2%
UK 3.0%
HONG KONG
SINGAPORE
Hong Kong 2.7% $2.16b $273m
Japan 0.7%
Key Findings
AUSTRALIA
$3.75b
OFFSHORE DOMESTIC PRIVATE INSTITUTIONAL

34.1% 69.9% 22% 78%
2019 2020
SALES VOLUME SALES VOLUME
-60.7%
$ 20.363B $ 9.953B
AVERAGE NUMBER OF AVERAGE NUMBER OF Source of Capital Investor Type
TRANSACTION SIZE TRANSACTIONS TRANSACTION SIZE TRANSACTIONS
$279m 73 $211.8m 47
The onset of the COVID-19 pandemic brought investment markets to a National Office Sales Volume CBD v Metro
halt at the end of March 2020, with both investors and vendors hitting
pause on investment decisions to assess the impact that the pandemic 25
BILLIONS ($)
would create on office markets. This impacted sales volumes in the second
quarter with only $1,763 million recorded nationally, down 64.4% from 20
the corresponding period in 2019, however there was an improvement in

Q4 with sales of $4,368 million. Total sales volumes were 61% lower than 15
the record year of 2020, however it is only slightly below the average sales
10
volumes since 2007. Transactions this year had an average sale price of
just over $211.8 million which was24.1% smaller than last year.
5
CBD Dev Site Metro Average

0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
SOURCE Colliers International
PERTH
6.5%
Market Share by State
The smaller markets of Perth and Adelaide saw sales volumes increase
when compared to 2019, with Adelaide seeing record sales volumes
MELBOURNE SYDNEY
through the year. Canberra saw no transactions over $50 million this 23.1% 53.8%
year and Brisbane saw sales volumes in the CBD fall almost 80% with MARKET SHARE
only one transaction recorded. Both Melbourne and Sydney saw sales BY STATE
volumes fall by 30.1% and 55.9% respectively. The Sydney market was
ADELAIDE
the most active market accounting for 53.8% of total sales this year.
9.1%
SOURCE Colliers International BRISBANE

7.5%
Metro markets nationally have seen significant interest and
investor activity and accounted for 37.7% of total sales volumes
for the year. Brisbane saw more activity in the metro markets
than in its CBD market during 2020 with Sydney almost an
even split between CBD and metro markets.
Institutional investors remain the dominant purchaser through

2020 accounting for 78% of all the transaction volume during
the year. Just under 66% of total transactions saw domestic
ownership structures, this is consistent with the theme of
increased need on local partners in order to transact with
offshore capital.
TOTAL
61% 39%
CBD vs Metro
Share of Sales
WA 91% 9%
CBD VIC
79% 21%
Metro
SA 88% 12%
QLD 12% 88%
NSW
SOURCE Colliers International 51% 49%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
The COVID-19 pandemic has had deep ramifications on the
Australian economy. National GDP is forecast to contract by
4.2% in 2020, population growth dropped to 1.3% in June
2020 compared to the five-year average of 1.6%, and the
unemployment rate peaked at 7.5% in July 2020.
The V Shaped
Recovery
However, Australia is managing the crisis well and the IMF is predicting
the pandemic to have a milder impact on the national economy relative to

other developed countries.
The ease of restrictions, the successful containment of outbreaks and the news
about an early roll out of an effective vaccine are giving cause for optimism.
National GDP rose 3.3% in the September quarter, the National Australia Bank’s
index of business confidence jumped by 9pts to 12pts in November 2020 and
Consumer Sentiment hit a ten year high in December 2020. The latest published
unemployment rate of 6.6% is a more positive outcome than expected. While
the recovery much depends on maintaining the suppression of COVID-19 until
a vaccine rollout, the outlook for 2021 appears to be improving.
A lot of research has been published on the office sector and most discussions absorbed reasonably rapidly. In line with expectations, effective rents fell nationally
revolved around whether COVID-19 will create a structural change or a cyclical on the back of increasing incentives, with face rents holding. In regard to the labour
change, as we have observed with other past economic downturns. market, the heavier job losses have been recorded in the Food and Accommodation
and Arts and Recreation sectors. White collar employment, which drives demand for
Office demand has been impacted by the recession leading to an increase in vacancy office space, recovered more rapidly. Some sectors such as Finance and Insurance,
rates across most markets. Sydney’s metropolitan market saw the biggest gains in Public Administration and Safety, Healthcare and Social Assistance are now seeing
vacancy, with Parramatta and North Sydney recording 10.2% and 16.4% respectively, payroll jobs above pre-pandemic levels.
up from 4.4% and 9.3% in Q2 2020. In Sydney and Melbourne CBDs, new supply
contributed to the lift in vacancy in July 2020 to 5.6% and 5.8% respectively. Net The short-term reduction in demand and a subsequent increase in vacancy are
absorption weakened sharply with an increasing number of occupiers offering sub- primarily due to the recession, rather than structural changes in the way people
lease space which is expected to add a further 2.3% to vacancy in the Sydney CBD over work. Those are cyclical corrections and do not impede the long-term prospects of
the second half. However as seen in previous cycles this space can be withdrawn or the office sector.
The working from home experience and the sharp decline in activity
in the CBDs have sparked discussions about the relevance of offices.
The use of virtual collaboration tools, the greater flexibility and the
de-densification in the office are considered structural changes that
may affect the utilisation of office space in the long-term. While
remote work has proliferated in a COVID-19 environment, we believe
that working from home will become a supplement to, rather than
a substitute for the office. Places matter because they create wealth
and provide fulfilling experiences. Of these places, CBD locations have
shown to be the most productive for knowledge industries, with firms
benefitting from clustering together and attracting the best talents.
In response to recent concerns about the workplace environment,

new cleaning regimens and technologies emerged such as
temperature scanners and touch free technology. This will likely
remain workplace fixtures. Buildings that will provide the latest in
health and hygiene facilities and more spacious layouts will be in
demand, in fact, demand for high quality office space will increase.
The change in tenant requirements is likely to be a key driver to the
next supply cycle. We are seeing some of the biggest landlords such
as Dexus, Charter Hall, DWS and Cbus Property commencing iconic
projects including the metro over station in Sydney, 555 Collins in
Melbourne, 185 Ann St, Fortitude Valley in Brisbane and 60 King SOURCES
William Street in Adelaide. The delivery of these projects is expected International Monetary Fund, Real GDP Growth
ABS. Australian National Accounts: National Income, Expenditure and Product September 2020
in late 2022 or 2023 and will bring new standard for office buildings.
National Australia Bank. Monthly Business Survey: November 2020
Space utilisation and technology will evolve to adapt to the new Westpac-MI Consumer Sentiment December
requirements. What will remain immutable however, is the need ABS. Labour Force, Australia November 2020
to be part of a work community and physical workplaces support Reserve Bank of Australia. Domestic Economic Conditions November 2020.
connections and the dynamic of corporate culture.
Sales activity in the Sydney office market fell by 51.1% in volume
(Sales over $100 million) and saw 10 less transactions compared to 2019.
While 2019 was a record year of sales, 2020 was only slightly below the 10 year average.
Metro office markets were favored by investors and accounted for 37% of the sales volume.
Institutional investors accounted for 77% of the sales volumes with 34% of this capital being
sourced from offshore sources.
Major Transaction Overview

Sydney
Sydney Office Market Sales Volumes ($100m+)
14,000
MLLIONS ($)
2019 2020 12,000
10,000
TRANSACTION VOLUME TRANSACTION VOLUME

8,000
-51.1%
$ 12,599M $ 5,56M 6,000
4,000
NUMBER OF 2,000
NUMBER OF TRANSACTIONS CBD 51% DOWN FROM 72%
TRANSACTIONS
33 METRO 49% UP FROM 28%
21 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CBD Metro Dev SIte Average

Institutional investors accounted for 71% of total transactions. Domestic source of capital – 78%.
Case Study: Sydney CBD
Governor Phillip & Macquarie Tower, 1 Farrer Place (25%)
The Sydney CBD experienced a significant decrease in transaction volumes

in 2020, with all but 1 transaction occurring in Q4 2020. The destabilisation of
COVID-19 was evident in the early part of the year, however the market gained
confidence over the second half of the year with investors taking a positive
view on the medium to long term viability of the Sydney CBD office market.
In December 2020, a 25% interest in 1 Farrer Place, Sydney, arguably the most
iconic premium grade tower in the CBD, sold to co-owner APPF (Lendlease) via
a pre-emptive rights process
The price of $584.6 million and capitalisation rate (4.39%) was reflective of the
June 2020 book valuation of vendor GPT. The capitalisation rate did not change
from the December 2019 book capitalisation rate of (4.39%), the variance
in price from their December 2019 (A$601.8m) book valuation was due to
adjustments in the occupancy assumptions.
The transaction to co-owner APPF demonstrated a genuine return of

confidence in the market, and continued the trend of existing co-owners

snapping up greater stakes in assets when they become available, notably two
similar transactions being:
+ 400 George Street, Sydney (25%) - ~$A300 million

+ Grosvenor Place, Sydney (50%) - A$925 million
These transactions highlight the continued demand for prime grade core
assets that rarely transact. With market confidence starting to return and Rate per sqm Sale Price
584.6M
investors having significant capital to place in the office markets, transaction $27,838
$
volumes are expected to increase in 2021, with some assets that were planned Capitalisation Rate
to trade in 2020 expected to come to market. 4.39%
Case Study: Sydney Metropolitan
1-5 Thomas Holt Drive, Macquarie Park
The Sydney Metropolitan office market saw an increase in investor focus

during 2020 with new entrant capital attracted to the changing occupier and
investment dynamics. Strong tenant covenants underwriting the income,
an attractive yield (compared to the CBD) and lower historical rental growth
(compared to the CBD) provide certainty of investment in the short to medium
term for core and core plus products.
Historically the Sydney metro was considered a core-plus / value add

investment location. 2020 saw a shift in metro markets with many offshore
core fund investors entering these markets for the first time. Many thematics
for both occupiers and investors alike are indicating positive reversions for
business parks and metropolitan locations, namely:
+ Decentralisation (occupier)
+ Affordability (occupier and investor)
+ Hub and spoke (occupier)
The clear market mover across Australia in 2020 was Macquarie Park with over
$1 billion transacting across 5 different assets.
1-5 Thomas Holt Drive, Macquarie Park was the largest on-market metropolitan
transaction for 2020, attracting significant interest from international investors
for the fundamentals mentioned above. The asset exchanged for $295 million
in December 2020 following an International EOI process with CapitaLand
(Ascendas REIT), acquiring their second Macquarie Park investment during 2020.
Rate per sqm Sale Price
295M
The depth of capital for a large-scale asset in a metropolitan location was $7,542
$
significant, with discretionary and mandate capital domiciled in Europe, Capitalisation Rate
USA and Singapore all participating with 57% of offshore capital fronted by 5.5%
Australian Managers, primarily as a function of the border closures in 2020.
The Melbourne office market has performed remarkably well considering
the extended stage 4 restrictions during the third and part of the fourth
quarter.
Total sales volumes were only 30.1% lower than in 2019 which indicates that the fundamentals of
the office market in Melbourne remain attractive. The CBD was still a drawcard with 79% of the
capital invested being in this market. Institutional investors accounted for just under 97% of total
transactions with 61% of the capital being derived from offshore sources. While sales campaigns
have been hampered by restrictions and border closures, there is still a weight of capital which is
looking to be placed in Core assets in growth markets such as Melbourne.

Melbourne
Melbourne Office Market Sales Volumes ($100m+)
4,500
MLLIONS ($)
2019 2020 4.000
3.500
3,000
-30.1% 2,500
$ 3,144M $ 2,199M 2,000
1,500
1,000
NUMBER OF 500
NUMBER OF TRANSACTIONS CBD 79% TRANSACTIONS
9 METRO 21% 9 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CBD Metro Dev SIte

Case Study: Melbourne CBD
Rialto Towers, 525 Collins Street, Melbourne (50%)
Despite changing conditions, 2020 saw a number of landmark transactions

occur in the Melbourne CBD among landlords continuing with strategic
disposals which were in train pre-COVID. Motivations included rationalisation
of redundant assets, decreasing concentrated asset exposure and attractive
partnership opportunities.
Rialto towers was one such example, with St Martin’s Property selling a 50%
interest to Singapore’s Sovereign Wealth Fund, GIC (45%) in a JV with Dexus
(5%). The remaining 50% interest is retained by Grollo Australia.
The acquisition had been in negotiation since early 2019 and therefore had
significant momentum heading into 2020. While a minor price reduction in the
vicinity of 2.0%-2.5% was negotiated in the final weeks, the price and metrics
were generally reflective of current valuations.
As part of the transaction, Dexus will be appointed as Investment Manager,

providing both GIC and Grollo the benefit of the Dexus management platform.
For Dexus and GIC, the acquisition was viewed as a once in cycle opportunity
to acquire a trophy premium grade asset in the Melbourne CBD, one which
has never traded since its development in 1986. For GIC, the opportunity to
acquire at a time when the Australian currency was at a cyclical low point was
also very favourable, despite the risks associated with COVID-19.
As with other major Australian markets, transaction volumes are expected
to increase in 2021 with assets slated to trade in 2020 expected to come to Rate per sqm Sale Price
644M
market following the easing of restrictions and a return in market confidence. $13,767
Capitalisation Rate
4.61%
$
Case Study: Melbourne Metropolitan
200 Victoria Street, Carlton
Sales activity in Metropolitan Melbourne has been relatively subdued throughout 2020 due to the
impacts of COVID-19, with Melbourne being under Stage 4 lockdown for much of the year. The market
experienced a substantial decrease in the number of transactions (A$20m+) from 17 in 2019 to 7 in 2020.
Deals of note include 200 Victoria Street, Carlton which sold for A$72m, 355 Spencer Street, West
Melbourne for A$38.5m and 173 Burke Road, Glen Iris for c. A$30m. Despite a lack of properties available
for sale throughout the year, institutional and offshore demand in Metropolitan markets continued.
200 Victoria Street, Carlton was one of the largest Melbourne Metropolitan transactions for 2020. The
property was sold by Colliers International on behalf of Australian Unity to Sydney-based investment
manager Realmont Property Partners, who purchased the property off-market on behalf of a subsidiary
of Japanese Fortune 500 company Nippon Telegraph & Telephone Corporation (NTT).
200 Victoria Street comprises a seven-level office building located in the northern City Fringe within the
suburb of Carlton. As of the date of sale the property was 97.6% leased, with the office component leased
to Environment Protection Authority Victoria (EPA Victoria) (66.8%) and Trinity College (The University of
Melbourne) (28.9%).
The transaction was agreed in January 2020 and exchanged on 27 March 2020 indicating the buyer
remained confident despite uncertainty around the COVID19 pandemic. We understand that the
purchaser benefitted from a lower AUD and is confident of retaining major tenant EPA Victoria. The price
achieved for this asset was within the expected pricing range and is reflective of the location, quality and
tenant covenants of the asset.
We expect the Metropolitan office sector will continue to attract strong demand and for transaction
volumes to increase significantly in 2021. Flight to quality assets, attractive yields, a resilient economy and Rate per sqm Sale Price
72M
political stability underpin the strong market fundamentals. Many offshore groups have management $9,100
$
teams in place in Australia and we expect flow of capital to continue to increase through to 2021. Capitalisation Rate
5.02%
The Brisbane office market has seen the second largest drop in sales of any
market with sales falling 79% compared to 2019.
The CBD market was the most heavily impacted with only one sale recorded. Metro markets saw
over $625 million invested during 2020 which accounted for 88% of total sales volumes. This
follows a record year in 2019. Institutional investors dominated the purchaser type during the year
accounting for 74% of the total transactional. Most of the capital investment in the Brisbane market
was derived from domestic sources.

Brisbane
Brisbane Office Market Sales Volumes ($50m+)
4,000
MLLIONS ($)
2019 2020 3,500
3,000
TRANSACTION VOLUME TRANSACTION VOLUME 2,500

-79.3%
2,000
$ 3,457M $ 712.3M 1,500
1,000
NUMBER OF 500
6 METRO 88% 7 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CBD Metro Dev SIte

Case Study: Brisbane CBD
340 Adelaide Street, Brisbane City
Post March 2020, there has been only one completed institutional grade office
transaction above $50 million in the Brisbane CBD. 340 Adelaide Street was
sold via an off market private placement by Mirvac. The successful bidder,
Forza Capital had recently completed a blind equity raise totalling $240 million
from its client base of family offices and high net worth advisory groups
seeking core-plus and value-add style investments.
340 Adelaide Street, formerly known as Oracle Tower, comprises a 17-storey,

refurbished ‘B Grade’ office tower constructed circa 1991 with basement
parking for 100 cars. The building comprises two levels of basement car
parking, ground level parking, retail and building foyer and 16 upper levels of
office accommodation. The office accommodation is situated around a central
services core, with floor plates extending up to 908sqm that are suitable for
single or multiple tenant occupation and are serviced by six lifts. The building
façade and ground floor were recently subject to a major refurbishment.
The building sits on two electricity grids with major tenants including
Covermore Insurance (14.0%), Cerebal Palsy League (Qld) (10.4%) and Oracle
Corporation (7.1%). A one-year rent guarantee was provided over the vacant
tenancies totalling 1,071sqm (8.35%).
The property sold at an 11% premium to Mirvac’s June 2020 book
value highlights the demand from domestic investors for quality office assets
given the historically low financing costs and Brisbane’s attractive yield spread.
86.75M
$6,761
Capitalisation Rate
7.43%
$
Case Study: Brisbane Metro
14 Stratton Street, Newstead
Post March 2020, there has been only one transaction above $50 million in the
Brisbane Metro office market. 14 Stratton Street exchanged unconditionally
late 2020 and is due to settle in March 2021 once completed.
14 Stratton Street will comprise a contemporary ‘A Grade’ office building,

incorporating basement level car parking for 171 cars and nine storeys of
office accommodation totalling 9,088sqm. The building is targeting a 5 Star
NABERS Energy Rating.
The building was purchased by Mater Misericordiae Limited (“Mater”) from

developer Silverstone Developments with 100% vacant possession.
Mater in turn offered the property to the market subject to a 10-year

leaseback. The leaseback was offered at a commencing rent of $5,225,600
per annum net ($575/sqm) over the office accommodation and $718,200 per
annum ($350 pbpm) for the car parking subject to fixed 3.00% annual reviews.
The property was on-sold with contemporaneous exchange to Charter Hall
Social Infrastructure REIT (ASX: CQE).
Brisbane-based Silverstone Developments picked up the Newstead site

in early 2019 from Metro Property. The developer began construction on
its speculative build late 2019 after appointing Hindmarsh to build the
Rothelowman designed project.
This transaction highlighted the confidence in health-related assets that rarely
transact which are underpinned by a solid tenant covenant and secured by a Rate per sqm Sale Price
122.49M
long-term lease. $13,479
Capitalisation Rate
4.85%
$
Calendar year 2020 has seen limited transaction
activity in the Canberra office market.
The level of demand for stock in Canberra has significantly increased

for long WALE government backed assets. The availability of stock has
been a highlighted issue with no formal marketing processes in 2020.
The border restrictions have created significant issues for marketing
and property inspections for international and interstate participants
who make up a large percentage of the buyer pool.
Canberra
Case Study: Canberra
1 Thynne Street, Bruce
The Canberra office market benefitted significantly in 2020 from its

exposure to the Commonwealth Government, subsequently sheltering
Landlords from potential volatile swings in vacancy rates, incentives and
rents. Unprecedented levels of enquiry from both domestic and offshore
capital sources was prevalent throughout the year, with purchasers seeking
defensive, long-WALE investments that provided secure cashflow during a
volatile 2020.
Despite the underlying buyside demand, only six major sales occurred in
2020 (>$10 million) with a total aggregate volume of ~$103 million. There
were no transactions above $50 million in Canberra during 2020. Most of
these transactions were contained in the ‘metro’ areas outside the CBD, as
institutional owners opted to retain or delay sales of Core assets.
1 Thynne Street, Bruce completed in H1 remains the standout sale for

Canberra in 2020. The 5,848m² metro office asset was 100% underpinned
by the Australian Institute of Health and welfare (AIHW), with a 9+ year WALE
with fixed annual growth of 3.00% p.a. Completed off-market by Colliers

International, the result reflects the strong demand for secure income
opportunities and provided evidence of the ongoing yield compression being
witnessed across the ACT market, particularly in metro areas (~25-50 basis
points in 2020).
39.3M
$6,720
Capitalisation Rate
6.28%
$
The Adelaide Capital Transactions market has been remarkably resilient in
2021 given the uncertainties created by the COVID-19 pandemic.
Transaction activity reached an historical peak with around seven deals and $863 million in volume.
Uncertainties in the leasing markets which have been felt in secondary office have resulted in the
emergence of a two-tiered investment market with values lifting for long WALE secure covenant
assets and softening for secondary assets with vacancy, short WALE’s and lower grade covenants.

Adelaide
Adelaide Office Market Sales Volumes ($50m+)
1,000
MLLIONS ($)
2019 2020
900
800
700
TRANSACTION VOLUME TRANSACTION VOLUME 600

+27.9%
500
$ 675.5M $ 863.875M 400
300
200
NUMBER OF
100
6 METRO 12% 7 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CBD Metro
Case Study: Adelaide
SAHMRI 2, North Terrace Adelaide (100%)
The SAHMRI 2 is the longest WALE office asset to be transacted and features
a blue-chip income stream to South Australian Health and Medical Research
Institute (SAHMRI) and predominantly state government backed tenancies.
Situated in the hub of Adelaide’s rapidly expanding Bio Med precinct on North
Terrace, Adelaide with its immediate neighbours including the New Royal
Adelaide Hospital, SAHMRI 1, the University of Adelaide’s New Health and
Medical Sciences Building and University of South Australia’s Health Innovation
Building, the precinct is at the heart of much of Adelaide’s major infrastructure
activity in recent years.
SAHMRI 2 is the largest capital value transaction in Adelaide and came

as a result of a pre-emptive negotiation between Dexus (Purchaser) and
Commercial & General (Vendor) with Commercial & General having a
significant stake in the Dexus Healthcare Fund following the sale of Adelaide’s
new Calvary Hospital to Dexus in 2019. It is the common view that if taken to
the market in an open and competitive based campaign that the yield would
have settled in the upper 4% range.
The transaction highlighted the confidence in the Adelaide market for core
located assets that rarely transact.
Adelaide CBD saw one of the busiest periods during 2020 in both aggregate
value of transactions and the number of assets transacted. As a result, stock is
expected to be subdued in 2021.
Rate per sqm* Sale Price
446.2M
* Rate psm is skewed as a result of significant costs associated with a subterranean bunker which will house the proton therapy equipment.
>$10,000
Capitalisation Rate
~5% - 5.2%
$
The Perth office market has seen an increase in sales volumes of 35.7%
compared to 2019 which saw 4 transactions. This was boosted significantly
by the sale of Chevron Place for $440.5 million which was exchanged in
2019 but settled in 2020.
The CBD accounted for over 90 percent of the sales volume which is slightly down on last year. WA
was the only state to see off-shore investors dominate the purchaser type accounting for over 91
percent of the transaction volume. Institutional investors were also the dominant purchaser type
also accounting for 91 percent of the total sales volumes.

Perth
Perth Office Market Sales Volumes ($50m+)
1,400
MLLIONS ($)
2019 2020 1,200
1,000

800
35.7%
$ 455.59M $ 618.3M 600
400
NUMBER OF 200
4 METRO 9% 4 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CBD Metro
Case Study: Perth CBD
190 St Georges Terrace
Calendar year 2020 has an increase in sales volumes over 2019 in the Perth
CBD. Offshore and interstate investors have been active participants in the
Perth office markets, which has been hampered by international border
closures and WA state borders being closed for substantial periods to
interstate travelers.
In contrast to 2019, where there were 5 major city deals over $50 million, there
was only one noteworthy transaction this year in the Perth CBD, occurring
in Q4 2020, which was 190 St Georges Terrace. The sale of this short WALE
(1.4 year) asset with a vacancy factor in excess of 20% demonstrates investor
confidence in the resilience of Perth’s office rental market.
The sale price reflected a core market cap rate of circa 7.5% for a “B” grade
building and suggests there has been very little softening in yields as a result
of COVID-19. It also highlights the attractive returns offered by Perth office
investments compared to other Australian cities.
The property was bought by Fiveight Property a local private investment

company and demonstrates positive local investor sentiment towards CBD
office as a viable asset class.
The pandemic impacts on Perth CBD office market has been gradual. A shift
in office space demand did occur and the vacancy rate increased slightly to
18.4% in July 2020 – but for secondary grade stock only. Prime grade vacancy
fell to 11.9% over the first half of 2020 down from 12.5% in January 2020.
The vacancy rate is not expected to increase significantly and will most likely
52.5M
$5,667
stabilise over 2021. Consequently, investor interest in Perth CBD offices is
anticipated to remain healthy which will assist with the anticipated increase in Capitalisation Rate
7.5%
$
transactions over 2021.
While disruption caused by COVID-19 has seen
transaction numbers over 2020 declining compared
with recent years, the rebound in investor activity
apparent over the second half of the year provides
a strong indication that investment assets will Investor confidence has been
command high levels of interest over 2021. bolstered by three main factors.
1
New Zealand’s economy has 2
The raft of support measures 3
The RBNZ’s quantitative easing
performed more strongly than had introduced by the government have measures and the low OCR assisted
been forecast in the early part of proved successful in reducing the with market liquidity and confirmed
NZ Overview
the year. short-term impacts on businesses. low interest rates for longer.
While the total number of commercial and industrial property interest in Wellington and Christchurch’s office markets in 2020 as
sales for the year to June 2020 will be lower than recorded in the search for high yielding, high quality assets has escalated.
the past few years, we project the aggregate value of sales will
reach around NZ$9 billion, which is not too dissimilar to the past The office sector accounted for approximately 11% of sales
few years. transactions over the 12 months to June 2020. The proportion of
sales values though sat at 24%.
The office sector has lower turnover than the industrial and
retail sectors, but higher aggregate price volumes. This reflects Private local purchasers remain the most prolific purchaser
the scale and higher value of office premises, especially in main group for properties sold for $5 million or more, accounting for
city CBD markets. While Auckland remains a destination hotspot 35% of total sales volume. This is a relatively consistent trend
for large value quantum office assets, there has been significant however, there has been a wide range of purchaser types in 2020,
especially in the $10m to $30m range.
While purchasing activity from offshore investors for high However, transactions have taken place and the desire to purchase New Zealand
property remains strong. In some respects, the attractiveness of New Zealand has
value quantum properties was prolific in the past few years,
been enhanced by the country’s economic resilience to the pandemic and the high
the inability to inspect properties and new overseas investment returns on offer relative to other countries.
office requirements have slowed investment intentions.
While uncertainty continues to surround the global economic outlook, investors
will continue to take a cautious approach. However, the continued low interest rate
environment, New Zealand’s resilient economy and the likely gradual reopening
of borders will bolster demand for high quality office assets across the country,
particularly those providing strong occupier fundamentals.
Major transactions include:
Sale Price Sale Price Sale Price
320M 67.5M 228M

$ $ $
136 Fanshawe Street 34 Shortland Street 20 Customhouse Quay
Auckland Auckland Wellington
The 20,000 sqm building currently under Sold to a New Zealand listed property Sold for $NZD 228 million reflecting
construction, sold for $NZD 320 million company, Stride Property Limited for a yield of 4.5% to Stride
to overseas buyer PAG Asia. $NZD 67.5 million. Property Limited.
A crisis? Yes, but this is no GFC.
Like many pandemic-induced predictions for 2020, an

anticipated ‘credit crunch’ in commercial real estate has failed
to materialise. In stark contrast to the Global Financial Crisis of
2008/2009, several factors have combined this time around to
underpin liquidity and limit distress in credit markets.
Debt Advisory
+ The Federal Government’s JobKeeper, JobSeeker, JobMaker and JobTrainer initiatives
propped up employment.
1. Unprecedented stimulus and relief measures

+ The National Cabinet’s Mandatory Code of Conduct forced the restructure of
COVID-19 spectacularly caused major stakeholders in our commercial leases with qualifying SME tenants, easing their cash flow burden.
financial system – the Federal Government, the RBA, regulators,

+ APRA, through temporary capital treatment regimes, empowered Australia’s banks
lenders and borrowers – to act in concert in a way we’ve never
to extend $265 billion in loan relief in just three months to support households and
witnessed to support jobs and business viability; and to curtail
commercial borrowers whose income sources were under pressure.
widespread financial collapse and deterioration in asset values.
+ Insolvency laws eased to provide temporary relief to directors’ duties to prevent

insolvent trading, giving companies time to pivot business models and recapitalise.
+ RBA’s significant quantitative easing program and reduction of the cash rate to
0.25%, then 0.10%, with guidance that this is not expected to lift for at least three
years, to stimulate spending and encourage borrowing for investment.
2. The influx of alternative lenders over the last 10 years Fast forward to 2020 and the number of additional lenders to
commercial real estate (CRE) has increased markedly. Countless second
By its very name, the GFC was a financial crisis. Liquidity evaporated tier banks and non-bank capital providers have established themselves
quickly, with banks demanding repayment of loans to recoup capital. as legitimate alternative sources of funding, diluting concentration risk
Many foreign-owned banks exited the Australian market entirely. with the major banks. Major bank market share of CRE loans is now in
steady decline, down to 76% as at June.
After the initial shock, major banks became the dominant force, growing
market share from 69% in 2006 to almost 88% by mid-2013. Their growth NOTE ADI figures exclude exposures with non-ADI lenders.
The non-bank market is estimated to be an additional $80 billion, and growing

in commercial property exposures of 2.4x outpaced overall Australian
Deposit-taking Institutions (ADI) market growth of just 1.9x during the
period, temporarily increasing vulnerability of our financial system to
further economic shocks.
SOURCE APRA, Colliers International
3. Moderation of leverage in CRE
A biproduct of the GFC was a regulator-imposed and market-wide

moderation of gearing levels.
Where 60% to 70% secured bank funding was the norm pre-2008, this
has since reduced to 40% to 50%, giving borrowers and lenders more
flexibility to ‘manage through’ this crisis.
In addition, record-low interest rates support the ability for borrowers
to continue to meet repayment obligations and servicing covenants,
even where property income is under short-term pressure.
Are we headed for a ‘Loan Cliff’? Lenders have necessarily proceeded with caution, supporting existing borrowers
to the extent they can as well as proceeding with limited new business activity.
In our view, no. And there are a few reasons for this. Experience tells us their appetite is patchy, depending on any one lender’s broader
exposure to the crisis.
1. Liquidity
That said, well-conceived deals, with strong sponsorship and detailed underwrite are
Lending activity has continued during the crisis, albeit with limited growth in CRE getting attention with headline debt terms comparable to those achieved pre-COVID.
exposures since March. (Despite overall growth since the GFC, ADI CRE exposures In fact, some borrowers are now ahead, with a large part of the value being delivered
actually reduced 20%, or $56 billion, between 2009 and 2011). via net interest savings resulting from close-to-zero base rates.
SOURCE APRA, Colliers International
SME Loan Data

2. Loan deferral reductions May 2020 SME Loan Data October 2020
APRA data indicates that loan deferrals have declined significantly since peaking
Total SME loans
210,000 50,000
in May at approximately 10.5% of the total loan market (or circa $265 billion). in deferral
As at October 2020, this had reduced by circa $185 billion, with loan deferrals
Total value of
representing around 3.5% of all loans. $311 billion $322.8 billion
all SME loans
As significant occupiers of office space, the biggest impact on commercial real $56 billion
Total value of
$14.3 billion
deferred SME loans
estate will arguably come down to the success or failure of Small-to-Medium Size
Enterprises (SMEs). We are encouraged by the most recent data that indicates % of all SME
18% 4.5%
loans deferred
SME loan deferrals are reducing ahead of the overall loan market.
SOURCE APRA
3. Improvements in rent recovery
Office landlords with high SME tenant exposure

experienced material reductions in rent collection
rates in Q2 2020 (to as low as 40% across some
portfolios), demonstrating the effect of the
pandemic on SME revenues and the obligations
imposed on landlords under the Mandatory Code
of Conduct.
However, by Q3 this had improved significantly

(up to 80%+), with further gains anticipated since
October 2020.
Notably, major office landlords with limited SME

exposures including Dexus, GPT Group and
Mirvac, managed to maintain strong collection
rates in excess of 90% since Q2 2020.
What will we see in 2021?
Despite positive indicators, we expect an element of ‘wait and see’ will continue into
2021 as various forms of stimulus and loan relief continue to be wound back.
+ Covenant relief expiry – + Relaxation of insolvent trading + JobKeeper expires (29 March)
extended case-by-case basis laws ceases (31 December)
+ Code of Conduct falls away (29 March)
+ First phase reduction of JobKeeper + Second phase reduction to
+ Temporary capital treatment relief
JobKeeper (3 January)
for loan deferrals ends (1 April)
SEP 2020 DEC 2020/JAN 2021 MAR/APR 2021
Once clarity is gained during Q1 and Q2, we believe the process of balance Quality underwriting will remain key for all lenders, with a forensic approach to
sheet repair will begin and banks will begin lending more freely again, albeit still analysing key risks such as tenant solvency, defensibility of income, renewal/re-
cautiously and selectively. leasing probabilities and overall market risk. Margins may move (noting we have
seen little evidence of this to date), though borrowers will remain ahead as base
Alternative lenders will continue to take advantage of any disruption to the real rates stay very close to 0%.
estate and banking markets, meaning general availability of funding should
not emerge as a concern for borrowers. That said, this form of funding is still Ultimately, borrowers who are realistic with the reliability of their income streams
extended at a significant premium to bank debt. and supportability of asset values with well-considered capital structures will be
best places to capitalise on real estate opportunities to emerge in 2021.
The Australian office investment market remains appealing on a Capital in-flow and demand remains particularly strong for well-leased quality office
assets within all major CBDs and even extending into fringe and metro markets where
global scale due to the attractive returns and overall transparency
long dated annuity style cash flows to strong tenant covenants are available. The
of the market when compared to other global peers. Domestically, opportunity to secure trophy office towers in key CBDs, even if they have short to
real estate investment markets appear stable, with sustained yield medium term cash flow issues, also remains a strong desire for a variety of potential
compression now evident across the majority of asset classes. purchasers, given the scarcity of such stock and opportunities to acquire.
There is also now evidence of yield compression spreading up the

The weight of capital chasing quality assets is expected to remain high, and
risk curve to assets traditionally considered secondary, particularly under normal circumstances further yield compression would slowdown at this
for those with short to medium term repositioning potential. point in the cycle in the short to medium term.
Valuation Outlook
Investment returns (IRRs) have shown progressive tightening in part due to lower growth
forecasts in some markets – particularly the Sydney CBD, higher capital expenditure
provisioning and softening of terminal yields (given the current low yield environment).
However, the historically low interest rate environment combined with the current yield
compression evident across most sectors of the market is in turn likely to see lower
or firmer IRRs more widely tolerated across all sectors of the market. In this theme,
Australian office return metrics are very much being compared on a global scale. Even
on a fully effective income based yield comparison, Australian office markets continue to
offer more attractive returns when compared to other major global office markets, and
therefore have further capacity to compress through this cycle.
For quality CBD office assets, Australia is very much in sync with
other major global markets where the theme is one of ‘lower for
longer’, whereby lower return metrics, as it relates to initial yield,
running yield and total return (IRR) are anticipated and tolerable for
quality cash flow credentialed assets. For secondary office markets,
despite the continued strength in capital markets, we are conscious
of risk adjusted premiums, which have compressed dramatically
in recent years and as such for secondary grade assets, whilst the
short term still presents an opportunity for some rental growth and
buyer demand doesn’t appear to have waned, we would caution the
continued strong pricing of these assets at a sustained aggressive rate.
A key area of focus looking into 2021 will be leasing markets, and
their interplay with investment demand. Leasing markets are
currently generally considered stable, and markets such as Sydney
and Melbourne have experienced healthy effective rental growth.
The velocity of growth in Sydney is however expected to moderate
as new supply is added to market, and tenancy churn begins to pick
up. The Sydney market has already started to witness early signs of
incentives ‘normalising’. In Melbourne, a significant volume of supply

reaching practical completion will be followed by vacated space being
withdrawn from market for refurbishment, resulting in tight conditions
for tenants being maintained throughout 2021. Other major CBDs
such as Brisbane, Adelaide and Perth are all starting to show positive
signs with respect to rental growth and incentives contracting,
continuing the gradual recovery witnessed in 2019 (albeit at varying
stages of their respective recoveries).
As we head into 2021 the economic impact of the COVID-19 Sectors which were above pre-pandemic levels include Public Administration (1.0%),
Healthcare and Social Assistance (3.1%), and Education and Training (2.9%). Q3 2020
pandemic and the effects on the office markets are becoming clearer.
GDP saw a bounce back in activity with indicators for Q4 2020 GDP pointing to growth
The continued suppression of COVID-19 in Australia has resulted which is suggesting that the economy has adapted to a new environment.
in mitigated economic impacts when compared to other developed
As a result of more clarity regarding the economic impacts from the pandemic,
countries. Australian white-collar employment has bounced back
capital transaction activity is expected to improve significantly in 2021. We have seen
faster than anticipated with some key industries for office demand
investor confidence improve over the fourth quarter of 2020 with investors looking for
seeing employment above pre-pandemic levels. opportunities to place capital in the Australian office markets.
Investment Outlook
2021 will continue to see a strong appetite for prime grade long WALE assets with a strong tenant covenant.
Competition for this type of asset is expected to be strong and therefore there is scope for further tightening in yields
for this class of asset. The limited stock offered for sale will likely to be a key theme while demand will remain strong.
Higher risk investments such as value add opportunities with vacancy and capital works required saw values ease as a
result of longer let up times and below the line valuation adjustments through 2020. The risks regarding let up times
and tenant demand are expected to become clearer during 2021 and as a result there will be returned confidence for
this sector of the market. There has been limited transactional evidence of higher risk, value add assets, widening the
gap between buyers’ and vendors’ expectation. As market conditions stabilise in 2021, we expect pricing to firm up.
The closure of international borders posed an initial issue for offshore investors during 2020, this has created impact
for the ability of international investors to acquire assets through there typical process. It has created an increased
reliance for onshore managers with domestic expertise in the management and transaction of Australian assets. This
will to continue to be a feature in 2021 with international borders unlikely to open in any meaningful way until he
completion of a vaccination roll-out.
Australia & New Zealand
Transactions 2020
Australian Office Investment
Transactions 2020
Sydney CBD (Sales over $100 million)
Address Suburb State Sale Price Partial Sale Transaction Date Initial Yield (%) Capital Value ($/m2) Vendor Purchaser
SC Capital’s Real Estate Capital Asia Partners IV fund

59 Goulburn Street Sydney NSW $270,000,000 100% Feb-20 4.92% $13,868 Poly Australia
JV Fortius Funds Management
45 Clarence Street Sydney NSW $530,000,000 100% Jun-20 5.03% $16,567 DEXUS Property Group Zone Q Investments
Grosvenor Place Sydney NSW $925,000,000 50% Nov-20 - $22,024 DEXUS Property Group Chinese Investment Corporation (CIC)
400 George Street Sydney NSW $300,000,000 25% Dec-20 4.60% $5,878 Investa Property Group M&G Real Estate
Governor Phillip and Macquarie Tower Sydney NSW $584,600,000 25% Dec-20 - $27,838 GPT Group Australian Prime Property Fund Commercial
76-78 Pitt Street Sydney NSW $281,500,000 100% Dec-20 4.50% $11,856 Telstra Charter Hall Long WALE REIT
Sydney Metro (Sales over $50 million)
20 Berry Street North Sydney NSW $113,888,000 100% Jan-20 4.39% $11,713 Yuhu Group Holdmark Property Group
The Octagon Parramatta NSW $95,000,000 50% Jan-20 6.00% $18,025 Longbow Enterprises RF Corval Value Active Fund 2 (VAF2)
100 Walker Street North Sydney NSW $166,500,000 100% Feb-20 4.89% $14,832 Christie Spaces Pro-invest
475 Victoria Avenue Chatswood NSW $120,000,000 50% Feb-20 5.42% $9,673 Cromwell Property Group BlackRock
1-5 Khartoum Road (development) North Ryde NSW $157,000,000 100% Jun-20 VP $2,855 Johnson & Johnson Stockland & Fife Capital
2 Banfield Road Macquarie Park NSW $144,000,000 100% Jul-20 5.09% $9,780 Goodman Group AEW Capital Management
Pinnacle Office Park Macquarie Park NSW $306,000,000 100% Aug-20 5.16% $8,628 Goodman Group Keppel REIT
45-53 Kembla Street Wollongong NSW $57,000,000 100% Sep-20 5.50% $8,431 Black Opal Bay Castlerock
MQX4 - 1 Giffnock Avenue Macquarie Park NSW $167,200,000 100% Sep-20 6.05% $8,628 Frasers Porperty Industrial JV Winten Property Group Ascendas REIT
27 Argyle Street Parramatta NSW $73,970,000 100% Oct-20 4.47% $7,123 Dyldam Vantager
60 Miller Street North Sydney NSW $273,000,000 100% Oct-20 5.08% $14,109 DEXUS Property Group Huge Linkage
65 Berry Street North Sydney NSW $212,000,000 100% Nov-20 5.21% $14,621 Charter Hall Office Trust Intera Group
APP House - 53 Berry Street North Sydney NSW $54,000,000 100% Nov-20 4.72% $15,315 Property Bank Australia Lederer Group
1-5 Thomas Holt Drive Macquarie Park NSW $295,000,000 100% Dec-20 5.90% $7,542 AMP Capital Ascendas REIT
Surry Hills House and No 1 Lacey Surry Hills NSW $96,700,000 100% Dec-20 4.71% $14,010 Cornerstone Real IS
Melbourne CBD (Sales over $100 million)
Rialto Melbourne VIC $644,000,000 50% Apr-20 4.2% $13,767 St Martins Property GIC (45%) & DEXUS (5%)
222 Exhibition Street Melbourne VIC $205,675,000 50% Jun-20 5.1% $13,631 LaSalle Investment Management (on behalf of CalSTRS) GIC
350 Queen Street Melbourne VIC $145,000,000 100% Jul-20 5.4% $6,768 Private Investor TE Capital Partners
235 Bourke Street Melbourne VIC $133,000,000 100% Sep-20 6.0% $5,779 RMIT University Futuro Capital
452 Flinders Street Melbourne VIC $454,300,000 100% Sep-20 5.0% $11,546 DEXUS Property Group Deka Immobilien
505 Little Collins Street Melbourne VIC $155,000,000 100% Nov-20 4.5% $8,574 Credit Suisse Asset Management AEW Capital Management
Melbourne CBD (Sales over $50 million)
200 Victoria Parade East Melbourne VIC $328,000,000 100% Feb-20 5.1% $12,477 Golden Age Group JV Time & Place ARA Asset Management JV QuadReal
Realmont Property Partners on behalf of Nippon Telegraph

200 Victoria Street Carlton VIC $72,000,000 100% Apr-20 4.9% $9,101 Australian Unity Diversified Property Fund
& Telephone Corporation (NTT UD)
Flight Center Headquarters St Kilda VIC $62,150,000 100% Apr-20 5.5% $8,320 Flight Centre Travel Group Shakespeare Property Group
Brisbane CBD & Metro (Sales over $50 million)
340 Adelaide Street Brisbane QLD $86,750,000 100% Dec-20 6.3% $6,777 Mirvac Group Forza Capital
Verde Tower Townsville QLD $92,855,000 100% Apr-20 7.8% $7,994 Steve Gosling & Jim Goldberg Castlerock
14 Stratton Street Newstead QLD $70,000,000 100% Sep-20 - $7,703 Silverstone Developments Mater Group
895 Ann Street Fortitude Valley QLD $260,000,000 100% Oct-20 - - Consolidated Properties Group (CPG) DWS
14 Stratton Street Newstead QLD $122,495,000 100% Oct-20 4.9% $13,479 Mater Group Charter Hall Social Infrastructure REIT
2 Burke Street Woolloongabba QLD $80,200,000 100% Nov-20 - $5,118 Trident Corporation Eleanor Investors Group
Adelaide CBD & Metro (Sales over $50 million)
100 Pirie Street Adelaide SA $23,125,000 50% Mar-20 7.1% $5,296 Australasian Property Developments Realside
169 Pirie Street Adelaide SA $25,125,000 50% Mar-20 6.7% $6,390 Australasian Property Developments Realside
141 Rundle Mall Adelaide SA $40,625,000 50% Mar-20 7.4% $4,733 Australasian Property Developments Realside
People's Choice Credit Union Headquarter Adelaide SA $175,000,000 100% Aug-20 6.5% $8,032 Cbus Property Nikos Property Group
SAHMRI 2 Adelaide SA $446,000,000 100% Oct-20 5.2% $13,938 Commercial & General DEXUS Heathcare Wholesale Property Fund (HWPF)
SA Police Building Adelaide SA $51,000,000 100% Nov-20 6.4% $3,087 Ascot Capital & 1835 Capital Charter Hall Retail REIT
SA Emergency Services Command Centre Keswick SA $103,000,000 100% Oct-20 4.8% $15,769 Axiom Properties Ltd Charter Hall Social Infrastructure REIT
Perth CBD & Metro (Sales over $50 million)
Chevron HQ Perth WA $440,500,000 100% Jan-20 5.0% $15,743 Brookfield Invesco
190 St Georges Terrace Perth WA $55,000,000 100% Nov-20 $5,875 Credit Suisse Asset Management Private Investor
905-919 Hay Street Perth WA $67,800,000 100% Dec-20 VP $5,075 Stamford Land Corporation Redhill Partners
20 Walters Drive Osborne Park WA $55,000,000 100% Jul-20 0.8% $3,712 BGC Mineral Resources
New Zealand Office Investment
Transactions 2020
Transactions above $20 MILLION (NZD)
Address Building Name City Price Transaction Date Initial Yield Vendor Vendor Origin Purchaser Purchaser Origin
136 Fanshawe Street Fidelity Life Building Auckland $320,000,000 2020 N/A Mansons TCLM Onshore PAG Asia Offshore
20 Customhouse Quay Deloitte Building Wellington $228,000,000 2020 4.50% 20 Customhouse Quay Limited Onshore Stride Property Onshore
133 Molesworth Street William Clayton Building Wellington $128,400,000 2020 - Ascot Capital Offshore Whangahumaru Limited Partnership Offshore
10 Oxford Terrace Manawa Building Christchurch $80,000,000 2020 4.14% Huadu International Offshore Offshore Private Offshore
34 Shortland Street N/A Auckland $67,500,000 2020 6.30% Kea Investment Offshore Stride Property Onshore
60 Cashel Street PwC Centre Christchurch $60,000,000 2020 5.60% Grand Central (NZ) Limited Offshore Maat Consulting Limited Onshore
21 Te Rapa Road Home Straight Park Hamilton $41,488,903 2020

6.00% Hamilton Homezone Limited Onshore Oyster Property Group Onshore
17-19 Home Straight Park Home Straight Park Hamilton $28,500,000 2020
34 Manners Street AIA Tower Wellington $22,000,000 2020 - Undisclosed Undisclosed Undisclosed Undisclosed
Total Office NZ $975,888,903

SOURCE
CoreLogic, Colliers International Research
Authors AU Authors NZ
Adam Woodward John Marasco Kate Gray Jonathan Petsalis Chris Dibble Richard Kirke Ian Little
AUSTRALIA AUSTRALIA AUSTRALIA AUSTRALIA NEW ZEALAND NEW ZEALAND NEW ZEALAND
Head of Office Capital Managing Director | Director | Research Head of Office | National Director | International Sales Director | Associate Director | Research
Markets, Australia Capital Markets & +61 401 610 766 Valuations & Advisory Services Research & Communications Capital Markets +64 21 391 260
+61 414 568 276 Investment Services Kate.Gray@colliers.com +61 415 507 150 +64 21 242 9447 +64 21 299 3120 Ian.Little@colliers.com
Adam.Woodward@colliers.com State Chief Executive | VIC Jonathan.Petsalis@colliers.com Chris.Dibble@colliers.com Richard.Kirke@colliers.com
+61 412 211 033
John.Marasco@colliers.com
Authors & Team

Team NSW
Adam Woodward James Barber James Mitchell Tim du Temple Brooke Conlon Charles Singson
SYDNEY, CBD SYDNEY, CBD SYDNEY, CBD SYDNEY, CBD SYDNEY, CBD SYDNEY, CBD
Head of Office Capital Markets, National Director | Director | International Capital National Director | Director | Associate Director |
Australia Capital Markets Capital Markets Debt Advisory, Capital Markets Debt Advisory, Capital Markets Debt Advisory, Capital Markets
+61 414 568 276 +61 419 429 757 +61 404 303 927 +61 403 040 990 +61 409 777 311 +61 427 482 261
Adam.Woodward@colliers.com James.Barber@colliers.com James.Mitchell@colliers.com Tim.duTemple@Colliers.com Brooke.Conlon@colliers.com Charles.Singson@colliers.com
Team NSW Team VIC
Jonathan Petsalis Jon Chomley Sophie Tieman Joanne Henderson Joe Bolster Trent Preece Anna Cavar
SYDNEY CBD SYDNEY, METRO SYDNEY, METRO SYDNEY SYDNEY METRO MELBOURNE, CBD MELBOURNE, CBD
Head of Office | National Director | Senior Executive | National Director | National Director | Director | Associate Director |
Valuations & Advisory Services Capital Markets Capital Markets Research Valuations & Advisory Services Capital Markets Capital Markets
+61 415 507 150 +61 412 219 830 +61 401 884 167 +61 2 9257 0286 +61 422 603 010 +61 400 504 300 +61 431 331 802
Jonathan.Petsalis@colliers.com Jon.Chomley@colliers.com Sophie.Tieman@colliers.com Joanne.Henderson@colliers.com Joe.Bolster@colliers.com Trent.Preece@colliers.com Anna.Cavar@colliers.com
Authors & Team

Team VIC Team QLD
Rob Joyes Rachael Clohesy Peter Volakos Jason Lynch Don Mackenzie Craig Clayworth
MELBOURNE, METRO MELBOURNE, METRO MELBOURNE CBD QLD, BRISBANE QLD, BRISBANE QLD, BRISBANE
National Director | Associate Director | National Director | National Director | National Director | National Director |
Capital Markets Capital Markets Valuations & Advisory Services Capital Markets Capital Markets Valuations & Advisory Services
+61 418 137 277 +61 466 918 158 +61 410 595 552 +61 404 092 422 +61 409 890 056 +61 423 828 236
Rob.Joyes@colliers.com Rachael.Clohesy@colliers.com Peter.Volakos@colliers.com Jason.Lynch@colliers.com Don.Mackenzie@colliers.com Craig.Clayworth@colliers.com
Team ACT Team SA
Paul Powderly Matthew Winter Robert Rixon Paul Van-Reesema Alistair Mackie Tanya Parker
ACT, CANBERRA ACT, CANBERRA ACT, CANBERRA SA, ADELAIDE SA, ADELAIDE SA, ADELAIDE
State Chief Executive, ACT Director | Director | Director | National Director | Director |
Capital Markets Valuations & Advisory Services Capital Markets Capital Markets Valuations & Advisory Services
+61 413 122 877
Paul.Powderly@colliers.com +61 432 344 684 +61 434 608 811 +61 412 806 994 +61 412 817 977 +61 432 548 015
Matthew.Winter@colliers.com Robert.Rixon@colliers.com Paul.Van-Reesema@colliers.com Alister.Mackie@colliers.com Tanya.Parker@colliers.com
Authors & Team

Team WA Team NZ
Wayne Lawrence Tory Packer James Cox Chris Dibble Richard Kirke
WA, PERTH WA, PERTH WA, PERTH NEW ZEALAND NEW ZEALAND
Director | Director | Associate Director | National Director | International Sales Director |
Capital Markets Capital Markets Valuations & Advisory Services Colliers Partnerships, Capital Markets
+61 434 650 853 +61 434 659 909 +61 434 659 836 Research and Communications +64 21 299 3120
Wayne.Lawrence@colliers.com Tory.Packer@colliers.com James.Cox@colliers.com +64 21 242 9447 Richard.Kirke@colliers.com
Chris.Dibble@colliers.com
DISCLAIMER
Colliers International does not give warranty in relation to the accuracy of the information contained
in this document. If you intend to rely upon information contained herein, you must take note that
the information, figures and projections have been provided by various sources and have not been
verified by us. we have no belief one way or the other in relation to the accuracy of such information
and figures. Colliers International will not be liable for any loss or damages resulting from figure,
calculation or any other information that you rely upon that is contained in this document.
AUSTRALIA & NEW ZEALAND Investment Review 2021 45

Capital Markets Investment Review 2021 OFFICE

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ANZ CAPITAL MARKETS | INVESTMENT REVIEW 2021

China 17.3% USA

OFFSHORE DOMESTIC PRIVATE INSTITUTIONAL

the corresponding period in 2019, however there was an improvement in

CBD Dev Site Metro Average

SOURCE Colliers International BRISBANE

Institutional investors remain the dominant purchaser through

QLD 12% 88%

the pandemic to have a milder impact on the national economy relative to

In response to recent concerns about the workplace environment,

connections and the dynamic of corporate culture.

Major Transaction Overview

Sydney Office Market Sales Volumes ($100m+)

TRANSACTION VOLUME TRANSACTION VOLUME

CBD Metro Dev SIte Average

Governor Phillip & Macquarie Tower, 1 Farrer Place (25%)

The Sydney CBD experienced a significant decrease in transaction volumes

The transaction to co-owner APPF demonstrated a genuine return of

confidence in the market, and continued the trend of existing co-owners

+ 400 George Street, Sydney (25%) - ~$A300 million

1-5 Thomas Holt Drive, Macquarie Park

The Sydney Metropolitan office market saw an increase in investor focus

Historically the Sydney metro was considered a core-plus / value add

Major Transaction Overview

Melbourne Office Market Sales Volumes ($100m+)

CBD Metro Dev SIte

Rialto Towers, 525 Collins Street, Melbourne (50%)

Despite changing conditions, 2020 saw a number of landmark transactions

As part of the transaction, Dexus will be appointed as Investment Manager,

200 Victoria Street, Carlton

Major Transaction Overview

Brisbane Office Market Sales Volumes ($50m+)

TRANSACTION VOLUME TRANSACTION VOLUME 2,500

$ 3,457M $ 712.3M 1,500

CBD Metro Dev SIte

340 Adelaide Street, Brisbane City

340 Adelaide Street, formerly known as Oracle Tower, comprises a 17-storey,

The property sold at an 11% premium to Mirvac’s June 2020 book

14 Stratton Street, Newstead

14 Stratton Street will comprise a contemporary ‘A Grade’ office building,

The building was purchased by Mater Misericordiae Limited (“Mater”) from

Mater in turn offered the property to the market subject to a 10-year

Social Infrastructure REIT (ASX: CQE).

Brisbane-based Silverstone Developments picked up the Newstead site

The level of demand for stock in Canberra has significantly increased

1 Thynne Street, Bruce

The Canberra office market benefitted significantly in 2020 from its

1 Thynne Street, Bruce completed in H1 remains the standout sale for

with fixed annual growth of 3.00% p.a. Completed off-market by Colliers

Major Transaction Overview

Adelaide Office Market Sales Volumes ($50m+)

TRANSACTION VOLUME TRANSACTION VOLUME 600

$ 675.5M $ 863.875M 400

SAHMRI 2, North Terrace Adelaide (100%)

SAHMRI 2 is the largest capital value transaction in Adelaide and came

have settled in the upper 4% range.

Major Transaction Overview

Perth Office Market Sales Volumes ($50m+)

TRANSACTION VOLUME TRANSACTION VOLUME

190 St Georges Terrace

The property was bought by Fiveight Property a local private investment

Major transactions include:

Sale Price Sale Price Sale Price

+ The National Cabinet’s Mandatory Code of Conduct forced the restructure of

+ Insolvency laws eased to provide temporary relief to directors’ duties to prevent