Capture opportunities in office market

Competition for properties may force landlords’ yields to all-time lows, Jones Lang LaSalle research analyst Sarah Dominey says.

Friday, November 22nd 2013, 12:00AM

by The Landlord

She said occupier demand was increasing and supply was static, which was driving up rents. But investor demand was so strong that it was driving yields down.

But she said opportunities were still available to building owners. Things such as speculative fit-outs to cater for people who could not imagine a potential office set up could add value for building owners as the market became more competitive.

Her colleague, Tyrell Snelling, who is national director in the project and development services team, said green characteristics were important but there were ways to maximise return and reduce costs.

“Government grants for approved suppliers can halve the time for a return on investment and with a clear demand being shown from occupiers for this type of building, it’s a no-brainer.”

People who took a risk on buildings that needed seismic strengthening could find the investment paid off as the market improved and tenant demand remained hot.

Ria Hayward, director of commercial property and asset management, said landlords should focus on building relationships to ensure tenancies were long-term.

“Inaction could result in your tenants being tempted to break leases and move elsewhere which will have a detrimental effect on your building’s value. Don’t wait the traditional 18 months before lease expiry to approach your tenants, pick up the phone now and get in there before someone else does.”

She said offering incentives to sign for a longer lease could improve the overall lease profile of a building, fundamentally securing its value.

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