Adelaide Commercial Transactions Hit $2bn

Commercial deals in Adelaide hit record heights over 2019 as transaction volumes reached $1.99 billion across all commercial sectors, accounting for 9 per cent of commercial deals across the country.

According to new figures from JLL, transaction volumes last year surpassed the previous annual record of $1.6 billion recorded in 2003, as investors continue to look for appealing opportunities outside of the tightly-held CBD markets of Sydney and Melbourne.

Driving those office deals are tightening vacancy rates, currently sitting at 12.8 per cent, which is underpinning growth in rents and creating upside expectations for investors.

Prime gross effective rents have increased by 5.5 per cent over the past 12 months with defence, aerospace, technology and health sectors having a positive impact on leasing enquiry and activity.

The city also has an undersupply of A-grade office towers with vacancy in that prime category currently below 5 per cent.

Investors tapping into the market have an eye on future-proofed assets with Adelaide benefitting strongly from the rollout of its Ten Gigabit project, which has enabled up to 700 commercial buildings to access high-speed fibre optic internet.

Billions of dollars in infrastructure investment is also forecast across the state which is expected to generate significant employment in the long-term with defence, medical, road networks, technology and renewable energy among the emerging sectors.

The financial year finished with a run of headline deals including Soilbuild's acquisition of 25 Grenfell Street for $134.2 million from Credit Suisse, topped only by Suntec Real Estate's acquisition of 55 Currie Street for $148.2 million from Arc Equity Partners.

Offshore investors were net buyers of commercial property in Adelaide, accounting for 61 per cent of total transaction volumes across the office, industrial and retail sectors.

Conversely, offshore groups were net sellers of commercial real estate nationally in 2019-the first time in more than a decade.

“These figures validate South Australia’s position as an established destination for both domestic and global institutional capital,” JLL South Australia managing director Ben Parkinson said.

“Attractive comparative yields to the eastern seaboard office markets and an ongoing positive occupier demand profile has resulted in an unprecedented weight of capital into the Adelaide CBD market.”