Blog - Commercial
RE-POSITIONING PROPERTY FOR PROFIT IN SYDNEY
As Sydney commercial real estate values scale record heights, even seasoned property investors might feel some caution. By historical standards, commercial property in Sydney is fully priced, and that may be an understatement.
But, for better or worse, with its rapid population growth (+30% in 7 years) and role in the world economy, Sydney is now part of a select group of global cities that run through a cycle of appreciation, adjustment, gentrification, transformation and more appreciation.
Sydney, outpacing other international cities
As seen in New York, London, Los Angeles or Hong Kong, as global cities mature, otherwise ordinary properties or neighbourhoods become targets for reinvention. For the last several decades, this process has been relentless and is likely a permanent feature of cities that enjoy rising incomes or populations, or both.
Sydney is a particularly strong example of this process, often outpacing other global cities.
Land tax, town planning regulations and building codes all come together to force even reluctant property owners to upgrade and re-position their properties. When they do, the particular building is often over the size that would be approved under current regulations, is subject to heritage or preservation orders, or simply has a cache that would not be offered by a new building.
Properly refurbished older buildings with style and grace will usually command premium rentals if appropriately renovated. In such a situation, in line with nearly every global city, the property owner should contemplate the option of going upmarket through repositioning to boost returns.
Like every large city, Sydney has thousands of structures and many that were built in earlier eras for markets long expired. As demand for more-upscale residential, retail or commercial office space grows, this stock of property begs for renovation.
283 Clarence Street, Sydney
An exquisite example of an upgrade and re-positioning is currently being carried out at the historical, 1910-built office structure at 283 Clarence Street, in the Sydney CBD. The redevelopers took advantage of the huge extant windows and high ceilings of the era while adding in new lifts, plumbing and a full interior makeover in the New York loft-style vein. There is even a roof-top bar!
Now, what had been an ageing office building is transforming into a peerless gem, with features – such as the spacious ceilings and an endless stream of natural light – often unavailable in modern structures.
From a business perspective, 283 Clarence Street will now command premium rents of $925 to $1,000 per square metre.
Given its location, long-term appreciation at 283 Clarence Street appears assured.
For more information about vacancies within this building contact Adam Hennessy.
Of course, no story about urban property makeovers is complete without a few warehouse-conversion tales. But there is a reason for this cliché: Residences and offices rent for a lot more than warehouses.
Historically, warehouses were built on cheap land in city fringe suburbs. But as Sydney grows and evolves, many former warehouses demand re-positioning to remain competitive.
10 Charles Street, Redfern
The brick warehouse at 10 Charles Street in East Redfern is a prime example of the adaptive reuse of a beautiful warehouse building. The property sits in an attractive location and suited creative types, such as architect or film companies, even before any renovation.
However, after a complete refurbishment in 2015, including new air conditioning, lift, data and power, along with exposed brickwork and oak flooring, the site has been meticulously transformed into an inspiring workspace.
TGC leased the property to Bohemia, a subsidiary of the international Saatchi group, in 2016. In the current market, the building would command rents over $600 psmpa Gross + GST, probably 40% more than before. More importantly, it will achieve capital growth and attract tenants by providing the exact look and feel that the creative industries are looking for.
For more information about any upcoming vacancies within this building contact Eric Lundberg.
7 Franklyn Street, Glebe
Another superb and instructional repositioning can be seen at 7 Franklyn Street, Broadway, a 1920s-era warehouse with abundant natural light delivered from a “sawtooth” roof and other features.
Spacious high ceilings and polished floors were enhanced by a modern stainless-steel staircase, all to create an excellent home for an organisation in need of 660 sqm of space.
Across the street from the successful Broadway Shopping Centre and other amenities, 7 Franklyn has the fillip of offering valuable signage to tenants and high foot traffic.
222 Clarence Street, Sydney
Another example is the stunning renovation of 222 Clarence Street, a heritage site and once-upon-a-time woolshed building.
The structure offers spacious ceilings, new waterworks and kitchens, abundant natural light, and herringbone floors to enliven workdays. For creative enterprises needing 315 sqm or more in Sydney’s CBD, 222 Clarence Street is an unmatchable home.
Following the refurbishment and repositioning, 222 Clarence Street rents sit at premium levels, near $1,000/sqm.
For more information about vacancies within this building contact Hamish Mackay.
Pondering the renovation market?
With Sydney property values near record levels, the shrewd but patient property investor should think about the renovation market.
Sydney is advancing among leading global metropolises, a place to conduct business pointing East or West, in one of the world’s most amenity-filled environments.
The upgrading of properties has been and will remain a pillar of the property scene for decades to come.
Unlike buying shares on the Sydney Stock Exchange, the direct purchase of property is much more idiosyncratic, with each property in a class of its own.
Buying and then renovating a property adds even more wrinkles.
For this reason, property investors are advised to work through a reputable Agency, that has a track record in helping investors acquire and then profitably lease or sell renovated structures.
An established agency will have decades of vital and irreplaceable ground-level market experience to help select beneficial properties and avoid novice snags or pitfalls. Even experienced investors value the informed sounding-board leading agents can provide.
Get in touch with TGC
The dedicated team of commercial real estate agents at TGC bring decades of experience in commercial leasing and sales in the Sydney CBD, city fringe and metropolitan areas. So, if you are looking to buy, upgrade, lease or sell commercial real estate, get in touch with one of our team members today!