HB Focus on Cr Nest St Lds 2018

Hartigan Bolt

Focus on Crows Nest & St Leonards

Q3 2018

NORTH SHORE COMMERCIAL PROPERTY – LEASING SALES & MANAGEMENT

Contents

Metro, Plaza and delayed LEP
What’s Leased
Rents & Availability
Sales Market
Management – Compliance & Adding Value
Summary of Offices For Lease

Important Note – The information contained in this publication is for general guidance purposes only and must
not be relied upon. Whilst the information has been obtained from sources that are deemed to be reliable no
warranty is given as to accuracy and no liability will be accepted. No guarantee is given as to the continued
availability of any property listed. All areas are approximate. All rents are quoted inclusive of year 1 outgoings.

30 Atchison Street, St Leonards

Metro, Plaza & Delayed LEP….

Crows Nest and St Leonards are continuing to go through substantial change.

Major residential projects including; St Leonards Square, The Landmark and 88 Christie Street are
changing the street scape and on completion will add significant numbers to the local population
and increase demand for retail and other services.

The site for the new Crows Nest Metro station has been cleared for tunneling which is due to be
completed by 2020. The Metro itself is scheduled to be running by 2024.

At a smaller scale North Sydney Council is moving ahead with plans for a new Plaza between Hume
Street and Willoughby Road which will also improve access to the new Station.

In planning for the new Metro a consultation paper has been published outlining uses and heights
for the sites currently being used for construction. The proposal shows two residential towers of 27
storeys over the future Station, an 8 storey commercial building on the former Beau Repairs site and
a 17 storey commercial building on the site fronting Pacific Highway south of Hume Street.

The wider Crows Nest and St Leonards planning review, which was expected this year has been
delayed and may not be announced until next year. Together with the proposed commercial uses
close to the Station this is a further sign that the State Government is in no rush to increase height
limits and encourage further residential development.

The Metro has already had a positive effect on property values in the area however for some owners,
proximity to the construction site is having an impact on leasing as tenants are concerned about the
prospects of noise. This has caused some rents to fall back while other areas such as Alexander
Street have seen rents strengthen.

Owners and tenants along Hume Street also face the impending demolition of 4 buildings plus
works for the new Plaza. Like the Metro this will be a real positive once complete but during
construction will cause some disturbance.

We include further details of recent activity in the market and if you have any questions or need
assistance with any property matter please give one of us a call.

David Bolt Chris Hartigan Leasing Team
0439 032 008 0410 304 496
Adam Ray 0421 258 945 Rupert Lore 0406 421 937
Drew Divers 0451 662 776 Bill Bannerman 0451 772 455
Ian Fortescue 0411 697 360

Office Leasing, Commercial Sales and Property Management 9955 9211

What’s Leased

Over the year to date we have leased more than 2,700sqm of offices in Crows Nest and
St Leonards an increase of 9% compared to this time last year.

We have worked hard to overcome perceptions of noise on buildings close to the Metro and following
4 lease deals have fully leased 35 Hume Street and 59 Hume Street.

We still have other suites available in the area and our clients are adopting a flexible approach to
terms to secure cash flow for the next couple of years.

In contrast Alexander Street has benefited from a perception of being quieter whilst still vibrant and
convenient. We have completed a series of lettings here at rents up to $510/sqm.

Recent Crows Nest Lettings include: 107 Alexander Street, Crows Nest

P Property Area sqm Rent / sqm

270 Pacific Highway, Crows Nest 70443 (Retail) 35 Hume Street, Crows Nest
270 Pacific Highway, Crows Nest 124 $315.0 68 Alexander Street, Crows Nest
270 Pacific Highway, Crows Nest 70 $350.0
272 Pacific Highway, Crows Nest 70 $297.0
300 Pacific Highway, Crows Nest 450 $470.0
306 Pacific Highway, Crows Nest 150
360 Pacific Highway, Crows Nest 80 T/A
155 $540.0
35 Hume Street, Crows Nest 72 $290.0
35 Hume Street, Crows Nest 57 $285.0
59 Hume Street, Crows Nest 55 $347.0
59 Hume Street, Crows Nest 180
7-11 Clarke Street, Crows Nest 25 T/A
64 Alexander Street, Crows Nest 45 $471.0
68 Alexander Street, Crows Nest 301 $400.0
68 Alexander Street, Crows Nest $416.0
70-76 Alexander Street, Crows Nest $425.0
90 Alexander Street, Crows Nest
107 Alexander Street, Crows Nest T/A
107 Alexander Street, Crows Nest
109 Alexander Street, Crows Nest 46 $480.0
35 $510.0
40 $511.0
45 $400.0

Office Leasing, Commercial Sales and Property Management 9955 9211

What’s Leased

St Leonards continues to be a popular location for 30 Atchison Street, St Leonards
office tenants but finding buildings that will offer 1 Chandos Street, St Leonards
long term security of tenure is getting harder as 120 Christie Street, St Leonards
many owners are planning for re-development. 55 Chandos Street, St Leonards
Some tenants are happy to take limited lease
security providing the rent is lower. For companies
that want secure lease terms of say 5 years rents
remain high and rising.

Buildings such as 1 Chandos Street and 30
Atchison Street where there are no plans for re-
development rents of up to $520/sqm are being
achieved and at 120 Christie street we have agreed
$585/sqm.

Recent St Leonards Lettings include:

P Property Area sqm Rent / sqm

30-36 Albany Street, St Leonards 75 $400.0
30 Atchison Street, St Leonards 177 $500.0
30 Atchison Street, St Leonards 115 $500.0
33 Atchison Street, St Leonards 150 $340.0
33 Atchison Street, St Leonards 106 $300.0
33 Atchison Street, St Leonards 145 $300.0
1 Chandos Street, St Leonards 193 $520.0
14-16 Chandos Street, St Leonards 518 $480.0
39 Chandos Street, St Leonards 140 $530.0
39 Chandos Street, St Leonards 350 T/A
55 Chandos Street, St Leonards 317 $350.0
71 Chandos Street, St Leonards 150 $220.0
71 Chandos Street, St Leonards 88 $300.0
120 Christie Street, St Leonards 305 $585.0
169 $450.0
38 Oxley Street, St Leonards

Office Leasing, Commercial Sales and Property Management 9955 9211

Rents & Availability Crows Nest

In the core CBD markets office vacancy rates have been falling for some time and now
stand at just over 5% in Sydney CBD and 6.3% in North Sydney.

Reduced availability and strong demand in these markets is leading to rental growth with A Grade
rents exceeding $1,000/sqm in the CBD and reaching $900/sqm in North Sydney.

We calculate that rental growth in North Sydney has been just over 6% p.a. since 2010.

In St Leonards and Crows Nest the official vacancy rate is just under 10% however a significant
portion of this is in buildings that are awaiting re-development and being leased short term, often at
discounted rents.

Buildings in St Leonards and Crows Nest that offer refurbished or good quality space with secure
leases have also seen rents rise and this trend is likely to increase as core markets become more
expensive.

Looking further ahead improvements such as the Metro and new Plaza will enhance the appeal of
Crows Nest and St Leonards. The influx of more residents into the new residential developments
should also lead to more demand for retail, medical and other services.

Office Leasing, Commercial Sales and Property Management 9955 9211

Sales Market

There is still good demand for commercial property, although some purchasers are
finding it harder to obtain finance and the wave of buying from China has fallen away as
capital controls restrict their ability to move funds to Australia.

The pause in the residential market has also had an impact and combined with tighter lending criteria
has stopped most developers from pursuing new site acquisitions.

Within Crows Nest and St Leonards many of the most viable residential sites are already in the hands
of developers and the next phase of site sales and consolidation is likely to occur when the Crows
Nest and St Leonards Planning Review comes through.

We are seeing some developers look to off load existing holdings although at present the number
looking to on-sell is limited.

Given the level of office rents and capital prices in North Sydney and the CBD it is not surprising that
larger funds are looking at pursuing new office developments. In North Sydney there is considerable
focus on the potential to sell older strata buildings for re-development and we are involved with some
of these on behalf of strata committees.

As rents have increased sharply, in North Sydney and the CBD we expect more companies will look
at alternative locations and St Leonards and Crows Nest are well placed to meet increased demand.
We therefore expect office rents to increase for good quality space and this may prompt more owners
to look at upgrading existing buildings and for developers to look at new commercial development.

Current & Recent Sales Include:

P Property Details

108 Alexander Street, Crows Nest 2 storey freehold of 350sqm
30 Atchison Street, St Leonards 2 strata suites of 151 & 318sqm sold for $1m & $2.05m
2 storey retail & office – sold for future development with delayed completion
17 Falcon Street, Crows Nest 2 storey office building of 717sqm – majority leased – Freehold for sale at $3.6m
47a Penrose Street, Lane Cove
55 Blaxland Road, Campbelltown Retail warehouse investment sold for $2.6m
4 unit industrial complex sold last year for $18.2m. We have since leased / agreed
7-9 Orion Road, Lane Cove
terms on over 2,500sqm and the building is now fully leased.

Office Leasing, Commercial Sales and Property Management 9955 9211

Sale Market Crows Nest

47a Penrose Street, Lane Cove 55 Blaxland Road, Campbelltown

For Sale Sold
47a Penrose Street, Lane Cove 55 Blaxland Road, Campbelltown
Freehold office building of Retail warehouse investment
717sqm Leased to 2019 at $109,710 p.a.
Large 1,121sqm site area Sold $2.6m
Majority leased

30 Atchison Street, St Leonards 7-9 Orion Road, Lane Cove

2 Strata Suites Sold Investment Sold
L2 Suite of 318sqm 4 Unit industrial complex
L3 Suite of 151sqm Total 5,766sqm
Sold to owner occupiers Site area 8,000sqm
Sold $2.05m & $1.0m Sold $18.2m

Office Leasing, Commercial Sales and Property Management 9955 9211

Management Issues – Compliance & Adding Value

The days when looking after a building was simply collecting rents and keeping up with
general maintenance are long gone. Keeping up with regulations and compliance is a
complex job that cannot be avoided.

Ever Increasing Compliance

A significant percentage of our management time is spent making sure that buildings comply with fire
and other regulations which are becoming ever more complex.

In some cases, the works required are clear cut but in others time spent with the right consultants
can save considerable cost whilst still achieving compliance and the right outcome for the building
and its tenants.

Having access to consultants that are practical and efficient is essential as is a good understanding
of the current compliance requirements.

Incoming Tenants

Close cooperation between our property managers and leasing team ensures that incoming tenants
know their responsibilities for obtaining approval for their fit- out works etc. We can help tenants and
the owner by recommending cost effective fit out companies and efficient certifiers. It is important
that incoming tenants are aware of their obligations up front so that deals aren’t delayed or fail to
proceed.

Increasing Income

Maintaining and adding to income is a critical part of our role and often involves various team
members to work closely together. In a recent example we now manage an industrial complex in
Lane Cove West that we sold last year with some vacancy. Our leasing team has successfully
relocated one tenant within the complex to a larger unit of 1,000sqm and has now leased a final area
of almost 1,500sqm which will bring occupancy to 100% and give a significant lift to income.

In Artarmon our leasing team is working to replace an existing tenant of 1,300sqm, that has already
vacated but has an ongoing lease to 2020. By cooperating with the outgoing tenant, we aim to
replace them with new tenants on longer lease terms and at higher rents. This should deliver improved
cash flow and income security for our client. We have already found a tenant for almost 25% of the
space and by the end of the year expect to have the remainder secured on long term leases.

Across The North Shore

Our experienced management team looks after more than 60 properties across the North Shore
including large multi-leased office buildings, individual freeholds, industrial complexes and strata
suites.

Office Leasing, Commercial Sales and Property Management 9955 9211

Management Properties

The following is a selection of some of our Management Properties.

11 Help Street, Chatswood 407 Pacific Highway, Artarmon

174 Pacific Highway, St Leonards 55 Chandos Street, St Leonards

33 Atchison Street, St Leonards 115 Alexander Street, Crows Nest

35 Hume Street, Crows Nest 7-11 Clarke Street, Crows Nest

Office Leasing, Commercial Sales and Property Management 9955 9211

Summary of Offices For Lease

Address Area sqm Rent P.A. Rent per o Note
wk
Crows Nest Excellent suite in 7-11 Clarke Street
L1 7-11 Clarke Street, Crows Nest 22 $11,984 $535 2 adjoining suites on level 1
L1 68 Alexander Street, Crows Nest Close to shops and cafes
L1 7-11 Clarke Street, Crows Nest 24 $15,600 $650
L1 24-26 Falcon Street, Crows Nest Refurbished with polished concrete floors
L2 308 Pacific Highway, Crows Nest 50 $27,125 $543 Includes kitchen & 2 offices
L2 20 Clarke Street, Crows Nest Refurbished with own kitchen
L1 27 Willoughby Road, Crows Nest 75 $36,603 $488 With existing fit out
L1 270-272 Pacific H’way, Crows Nest Office with boardroom
L1 310 Pacific Highway, Crows Nest 89 $40,185 $452 Offices + balcony
L1 24-26 Falcon Street, Crows Nest
L2 31-33 Hume Street, Crows Nest 104 $36,400 $350 Refurbished - polished concrete floors
G 306 Pacific Highway, Crows Nest Convenient office with meeting room
L1 104 Alexander Street, Crows Nest 110 $35,000 $318
L1 70-76 Alexander Street, Crows Nest Ground floor retail / commercial
L1 107 Alexander Street, Crows Nest 110 $38,500 $350 Creative space
L1 186-188 Willoughby R’, Crows Nest
G 1 110 Alexander Street, Crows Nest 124 $43,400 $350 Fitted out suite - Terms agreed
St Leonards Whole of level 1 - Terms Agreed
L1 1 Chandos Street, St Leonards 133 $65,170 $490 Features exposed vaulted ceilings
L2 55 Chandos Street, St Leonards First floor refurbished with sky lights
L4 30 Atchison Street, St Leonards 145 $35,000 $241
L4 55 Chandos Street, St Leonards Impressive offices opposite Station
L4 1 Chandos Street, St Leonards 219 $141,700 $647 Includes 3 private offices
G 120 Christie Street, St Leonards
L3 1 Chandos Street, St Leonards 275 $79,000 $287 New carpet & lighting great natural light
L1 120 Christie Street, St Leonards Boardroom, 2 offices & open plan area
L5 39-41 Chandos Street, St Leonards 294 $141,360 $481
Impressive offices opposite Station
299 $134,685 $450 Fitted out with natural light on 3 sides
Corner office refurbished with fit out
314 $141,300 $450
Refurbished with spec fit out
800 $360,000 $450 With fit out & work stations

118 $64,845 $550

128 $57,600 $450

177 $92,925 $525

207 $93,150 $450

215 $118,250 $550

274 $129,960 $475

287 $157,630 $550

301 $142,975 $475

467 $202,211 $433

.Important Note – The information contained in this publication is for general guidance purposes only and must not be
relied upon. Whilst the information has been obtained from sources that are deemed to be reliable no warranty is given
as to accuracy and no liability will be accepted. No guarantee is given as to the continued availability of any property
listed. All areas are approximate. All rents are quoted inclusive of year 1 outgoings.

Office Leasing, Commercial Sales and Property Management 9955 9211

Hartigan Bolt
www.hbproperty.com.au

Offices At: Level 7, South Tower
1-5 Railway Street,
Level 11, Chatswood NSW 2067
75 Miller St,
North Sydney, NSW 2060

For further information on any of our properties or services
please contact us on 02 9955 9211

Directors 0439 032 008 Leasing Team 0421 258 945
David Bolt 0410 304 496 Adam Ray – Director 0451 662 776
Chris Hartigan Drew Divers – Director 0411 697 360
Ian Fortescue – Director 0406 421 937
Rupert Lore 0451 772 455
Bill Bannerman

Office Leasing, Commercial Sales 9955 9211
and Property Management