Sydney’s Ash Street Cellars’ spaces are in hot demand. Photo: Steven Siewert SWSFoodies have emerged as the fastest-growing tenants in all capital cities as they vie for space with retailers but are willing to pay a premium for the right location.
The height of the demand is such that one of the well-known groups, Urban Purveyor, owned by Quadrant Private Equity, is looking to expand through a public listing. Its stable includes the Fratelli Fresh chain.
The group has said it is targeting to raise about $1 billion in a public listing to help change the eating habits of the country.
Matt Hudson, associate director retail leasing for Colliers International, said the strategic purchase of the Fratelli Fresh Group provides new owners Urban Purveyor Group with a perfect springboard into the Italian cuisine sector and offers an immediate expansion platform across the broader eastern seaboard.
UPG is targeting to open 20 restaurants across their portfolio in 24 months, which will include popular brands such as Sake, across the Eastern Seaboard and is looking for raw sites and existing businesses with strong cash flow and strong brand presence.
The demand for the food retailers is growing in unison with the expansion of city workers and residents. And the tenants are willing to pay higher rents for the locations to beat clothing and other traditional city tenants.
The new Sydney openings include Dr Sam Prince’s new Indu in the former Dymocks basement at 350 George, Nathan Sasi with its just opened Mercado next door to Ash St Cellar and Peter Thompson, who is set to open in the basement of 14 Martin Place fronting Angel Place.
In Melbourne, UPG recently purchased two leasehold sites:the old Stoke House from Frank van Handle and and a space directly next door to Chin Chin in the heart of the city.
Riverside Quay in the Southbank precinct will add 10 to 12 new operators, activating street food vendors and delivering another laneway culture along the Yarra’s banks.
The swath of new restaurants also reflect the trend of younger people wanting to eat out and enjoy a more relaxed lifestyle in the city.
According to Mr Hudson, Sydneysiders are seeking greater dining options, which is resulting in operators delivering broader palate options which had previously been available only in other international cities like New York and London.
“The strength of the food and beverage sector has assisted with underpinning core office assets with like-minded amenities to match the premium and A grade accommodation above,” Mr Hudson said. “It looks like Sydney is fast on track to overtake Melbourne as the dining capital of Australia. This will be underpinned with the anticipated success of many restaurants around the inner city.”
Other new tenants include Maurice Terzini who is set to open his take on the Bondi Italian institution, Da Orazio, at 20 Martin Place fronting Penfold Place. The electric car group, Tesla, is also opening at 20 Martin Place.
Swillhouse Group has just opened Huberts at 6-10 O’Connell Street in the old Celestial Chinese restaurant and it is rumoured that the China Doll group has secured the site at the entry to the recital hall in Ash Street.
The conversion of the ex-hair salon at 6 Bridge Street is expecting an all-day cuisine similar to that of Melbourne’s Cumulis Inc. and is scheduled for an opening mid-year.
Mike McEnearney is set for the long-awaited opening of his new CBD site at 1 Bent Street next month.
Michelin-starred chef Jason Atherton is taking up the final vacancy at Kensington Street’s The Old Clare Hotel with his first Australian venue
Chef Clayton Wells’ first solo restaurant, Automata, is open in The Old Clare Hotel.
Sydney’s office market is tipped for solid rent rises as stock is withdrawnOffice landlords are now back in control as space is taken for infrastructure projects and residential conversions, leading to a forecast for rent rises of close to 8 per cent, according to Cushman and Wakefield.
Investment sentiment is also stable with CBD hotels, office and retail properties in the highest quartile of demand, according to the NAB quarterly Australian Commercial Property Survey, for the first quarter of calendar 2016.
However, while extensive development projects are planned – Sydney is driven by the NSW government – banks are tightening the strings, making some developers nervous.
According to NAB chief economist Alan Oster, more developers said their debt and equity funding situation had worsened over the quarter, while the average pre-commitment requirement to get projects up and running rose for the fourth straight quarter to 54 per cent.
Amid the lending concerns, John Sears, national research director for Cushman and Wakefield, said the majority of stock withdrawals would occur in the Sydney city core to give way to the construction of Sydney Metro stations and the redevelopments around the Circular Quay precinct.
Mr Sears said Cushman and Wakefield analysis indicates that as a result of development and compulsory acquisitions over 290 tenants are likely to be requiring new premises.
He said Sydney CBD office fundamentals may finally be lining up to allow landlords to ride a wave of falling vacancy and stronger rental growth over the next five years.
“The stock withdrawals, combined with limited new supply, suggest that net supply is likely to be negative or flat between 2017 and 2020,” Mr Sears said.
Cushman and Wakefield’s Dr Dominic Brown, the head of Australia and New Zealand research, estimates around 90,000 sq m of gross supply will be added per annum over the next four years.
“This is 34 per cent less than the 10-year average of around 140,000 sqm per annum,” Dr Brown said.
“The improved demand has already resulted in stronger rental growth over 2015, with incentives declining from around 30-33 per cent to 28-30 per cent by the first quarter of 2016. If the vacancy rate continues to decline as forecast, both stronger face rent growth and an ongoing decline in incentives should continue.”
Dr Brown and Mr Sears said this may result in prime gross effective rental growth averaging around 7.5 per cent per annum over the five years to 2020.
That would be the strongest sustained rental growth for the Sydney CBD office market in many years.
Recipients to the NAB survey say in leasing markets, office rents are expected to grow 1.1 per cent and 1.5 per cent, nationally in the next one to two years, led by solid returns in NSW and to a lesser extent Victoria.
Mr Oster said property professionals in the CBD hotels sector are also the most confident in the next year, followed by office and retail.
Sustained growth: The Corrimal Hotel in Wollongong was sold for just under $10 million. Photo: SuppliedPub sales are the hot ticket with close to $200 million worth of pubs having changed hands in the past year, from the outer suburbs of metropolitan Sydney to the inner fringe and parts of the city.
One of the latest was the Terminus at Pyrmont, which has laid dormant for 30 years.
The new owner, a private developer, is now assessing the best way to bring it back to life.
It was sold for $5 million by Auswin TWT, who bought it a year ago from the private Wakil family. Auswin TWT will retain the 2300-square-metre carpark on the south-western side of the hotel where it plans to develop luxury residences.
Another deal was the Corrimal Hotel in Wollongong, which was sold for just under $10 million by long-term owners, the Denmeade family.
CBRE Hotels, in conjunction with Ray White Hotels, sold the property on behalf of the family who has owned the hotel for nearly 20 years.
The buyer was Peak Investments, a newly formed private equity consortium headed by ex-Citigroup banker, Damian Kelly. It signifies Peak Investments’ second foray into the NSW gaming market following last year’s purchase of the Rose and Crown Hotel in Parramatta.
CBRE Hotels national director, Daniel Dragicevich, said Sydney gaming assets are becoming very tightly held, which has led to what are traditionally metro purchasers looking further afield.
“The Corrimal Hotel has experienced a period of sustained growth following recent improvements and presented all the key ingredients for a continually successful operation, large retail site with car parking, solid business mix and in a high growth area.”
Ray White director, Andrew Jolliffe, said the Illawarra region continues to be in high demand from experienced hoteliers and new funds alike and the Corrimal Hotel sale comes hot on the heels of the Conniston Hotel and Unanderra Hotel (to the Denmeade family), which both changed hands in the past 12 months highlighting “a continued confidence in the area”.
Long-term owner Andrew Denmeade, who has retained both the Unanderra Hotel and 2013 AHA Hotel of the year, Central Hotel in Shellharbour, said the sale of the Corrimal Hotel represented the right time for our family to exit the asset, “which has proved a great hotel and investment for us over nearly the last two decades”.
Mr Denmeade added that the sale did not represent in anyway an exit from the industry for the long-term hoteliers and in fact they would be looking to redeploy the capital, more than likely in the Illawarra area as soon as a suitable opportunity presented itself.
Amid the done deals, are the pending sales, including the Cargo Bar, Darling Harbour. The Keystone Group is the vendor through Mr Jolliffe and any new buyer has the option to keep the business as a going concern.
On the move: GPT has paid $16 million for 5.1 hectares to build a logistics site at Eastern Creek. Photo: Craig WilloughbyGPT Group has paid $16 million to expand its industrial footprint, as a reflection of the rise in importance of the once-humble shed.
The 5.1-hectare site, located on Eastern Creek Drive, Eastern Creek, has the potential to deliver up to 26,000 sqm of prime logistics facilities and is in close proximity to the M4 and M7 motorways.
GPT’s head of office and logistics Matthew Faddy said the purchase would be a strong addition to the group’s 135ha land bank that is expected to deliver about $400 million of logistics product.
This comes as demand for logistics facilities is growing at a rapid pace to accommodate online shopping goods and services, so-called dark supermarkets, where they sell direct and off-site storage from city-based companies.
“The Eastern Creek acquisition will help GPT replenish its development land bank and continue to take advantage of the positive fundamentals in the Sydney industrial market,” Mr Faddy said.
“The purchase follows the group’s success in delivering $300 million worth of logistics and business park assets at Erskine Park and Sydney Olympic Park last year.”
The growth in the sector is also costly, particularly the third party logistic tenants, DHL and FedEx, who are the main tenants and also deliver the goods.
Demand by consumers to have items, bought online, at their doorstep on the same day, can be costly for the service providers, such as needing a fleet of couriers at their disposal.
Richard H. Thompson, global head of supply chain and logistics solutions at Jones Lang LaSalle (JLL), says, with the rise in this demand, companies need to get their business ready for the upcoming growth phase.
Chicago-based Mr Thompson, said now that economies are turning around, businesses that focused on cost reduction in the supply chain, now need turn their attention to these rising costs.
During the most recent recession, cost reduction was the operational mantra and a more lean and mean supply chain developed. Corporate supply chains have enjoyed a period of stable freight rates, low interest rates and low real estate rents.
A new report, Perspectives on Supply Chain, from JLL says that the favourable economic conditions could present critical issues for the supply chain of the future.
“Stable freight costs, zero interest rates and low real estate rents have been par for the course the last several years,” Mr Thompson said.
“Supply chain executives need to act now to manage rising costs in the future.”
JLL has identified a number of operational issues that companies should remain focused on as the economy continues to strengthen: being customer service expectations, which means new warehouse networks. It is no longer competitive to offer delivery within seven to 10 days as it was years ago.
“The new normal is next day and moving to same day,” he said.
“Now is the time to look strategically at your distribution footprint. Based on our research and current trends, the longer you wait, the more costly your real estate solution will become.”
These long-term decisions may include negotiating extended lease terms, making the move to more sophisticated space, expanding or consolidating, and/or making decisions on secondary and tertiary locations.
Global outsourcing is another issue to be addressed, being having alternatives closer to the home. There are well-known cost/service trade-offs when selecting global sourcing options.
“We are seeing global manufacturing companies adopt regionalised manufacturing strategies. They are looking to make/source products in the same region of the world that they are consumed. Being closer to the consumer reduces transit times, complexity, risk, cost and improves service,” he said.
Innocent bystander: Edward Spowart was killed at Granville on April 21, 2008. Photo: Supplied The crime scene where Edward Spowart was fatally stabbed in Granville on April 21, 2008. Photo: NSW Police
The crime scene at Granville where Edward Spowart was fatally stabbed in April 2008. Photo: NSW Police
A Sudanese refugee who was convicted of the stabbing murder of an innocent bystander following a fight between two groups in Sydney’s west has been acquitted after spending more than six years behind bars.
The 15-year-old Sudanese youth, known as JB for legal reasons, has had his conviction quashed after it emerged years later that the support person he allegedly confessed to was actually a registered police informant.
Not only was JB and his legal team not told this, but they were not made aware that the support person, known as A107, was given a certificate of assistance by police for his help in JB’s case when A107 was sentenced for unrelated fraud offences.
On Friday the Court of Criminal Appeal ruled JB should be acquitted of murder.
The Chief Judge at Common Law, Clifton Hoeben, said that without A107’s evidence, the Crown case against JB was not strong and a retrial was not likely to result in a conviction.
“The trial of JB miscarried because of failures on the part of the prosecuting authority,” Justice Hoeben said.
Edward Spowart, 54, died in the early hours of 21 April 2008 during a fight between two groups of Sudanese and Islander youths at Granville.
JB was convicted of murder in the NSW Supreme Court in September 2009 and jailed for a maximum of 23 years with a non-parole period of 16 years.
After JB unsuccessfully appealed to the Court of Criminal Appeal and the High Court, material was discovered relating to A107’s true identity. In November 2014 a single appeal judge referred the matter for a full appeal hearing. JB was granted bail, having spent six years and eight months behind bars.
It was revealed that typed notes of a meeting between the Crown prosecutor and the director of public prosecutions prior to the trial had been edited to remove A107’s status as a police informant before they were served on JB’s lawyers.
The court found a significant aspect of the Crown case was that JB made admissions following his arrest to the support person, at the police station.
During the trial, the Crown put to the jury that a verdict of guilty could be returned based on the admission alone.
After the appeal court ruled the conviction should be quashed, the Crown argued for a retrial, saying it would rely on evidence other than JB’s alleged admission to A107.
But the CCA found there was not sufficient evidence available to establish JB had murdered Mr Spowart, who died from loss of blood from trunk and thigh wounds.
Justice Hoeben said it was significant that eight years had passed since Mr Spowart’s death, especially given the young age of the witnesses and the fact that all of them had been affected by alcohol.