Year in Review: Jones Real Estate in 2022

2022 was a year of steadfast optimism for the commercial property sector in Victoria. And while the lingering effects of the pandemic continued to be felt, they also helped spark positive change and opportunities in our industry.

For us, it was another action-packed 12-months, so keep reading for an insight into what we observed across the Victorian market in 2022, trends which we suspect will carry over into the changing market conditions and opportunities to present themselves in 2023.

Interesting market activity in 2022 

The RBA’s eight consecutive interest rate hikes created interesting knock-on effects within the commercial property industry. As a result of these, institutional investors have shirked at the cost of borrowing cash for acquisitions, opening up more supply for the local and international private investment markets. 

And while sentiment softened across the institutional sector, demand for diversified commercial properties from private parties surged significantly – helping us secure a 90 per cent clearance rate for tenanted investments in 2022. 

Vacant possession properties fuelled some of the demand among purchasers, however medium to long-term tenanted commercial property stock occupied by trusted retail brands, delivering fixed annual yields between 4.5 – 5.5 per cent, emerged as the most desired opportunities. 

With the cash rate tipped to hit as high as 3.85 per cent in May according to ANZ and Westpac, this private investor buying frenzy could continue well into this year.

A breakthrough asset class that emerged in 2022 stems off the back of adaptive reuse projects of former industrial warehousing properties. We saw a surge of New York loft-style office accommodation hit the market that have been up-spec’d with innovative 21st century amenity including sound-proof studio nooks, break-out recreation and brainstorming areas with bar facilities, as well as commercial kitchen equipment – appealing to a wide array of business types.

Dubbed the ‘Industrial Renaissance’ by our team, some of the areas championing this new wave of office asset are established creative and technology hubs like Cremorne, Richmond, Collingwood and Abbotsford, however with recent planning amendments to the North and West Melbourne precincts, we expect these areas to be the next frontier that will support the evolution of the trend.

Jones Real Estate highlights in 2022

Our team achieved a 100 per cent development site sale clearance rate across all asset classes, showcasing our deep understanding of the broader development sector and negotiating skills that have driven our industry-leading results.

Hotel transactions were up in 2022 as sentiment among international and domestic travellers lifted further. One of our larger sale transactions occurred at 221 Rosslyn Street, West Melbourne, which notched in excess of $33 million off the back of a competitive on-market expressions of interest (EOI) campaign for Trenerry Property Group, Victor Smorgan Group and the Kanat Family.

Our team was been able to defy some of the lingering COVID-19 headwinds impacting the office and commercial markets, evidenced by our 100 per cent sell down of Horizon North East Office Buildings exceeding $10 million on behalf of the Agosta Family through transaction manager Advise Transact.

It was incredibly pleasing to watch our business’s credibility grow in the marketplace, as we worked with local, national and international clientele and organisations, selling the Melbourne headquarters of ASX-listed Food Revolution Group in Mill Park for $20 million. 

Furthermore, the sharp yields secured during the sales of AWM Electrical, AutoPro and Petstock in September at the Hastings Trade Centre which ranged between 3.9 – 4.1 per cent were another strong sales case study for the year, demonstrating our ability to observe and implement strategies to capitalise on openings across the private market for our client – as institutional activity slowed due to the increased cost of capital.

Our property management and leasing division grew by 50% per cent in 2022, spearheaded by Chief Operating Officer Robbie DiCintio. The division finalised leasing transactions including the 100 per cent project leasing completion of M-Square Shopping Centre in Mickleham and the sourcing and pre-lease of a purpose built 11,750sqm* state of the art office warehouse for one of Australia’s largest, independent interior furnishings and property styling companies Guest Group, in Dandenong South. 

We welcomed 6 new team members to the Jones Real Estate business in 2022, which have swiftly established themselves as key contributors to our day-to-day operations across our property management, sales, leasing and administration divisions. We therefore moved from Scottish House in William Street and acquired then renovated a larger full floor office space at 1 Elizabeth St, Melbourne – a far cry from our humble beginnings of a one-bedroom apartment in North Melbourne in 2019!

Our team of commercial property specialists are finalising our analysis and projections for the year ahead, so please feel free to reach out should you wish to discuss our views and the opportunities which may exist for you and your clients.