Latest news with #flightToQuality
News.com.au
2 days ago
- Business
- News.com.au
Dexus rides CBD rebound, as Invicta House shows heritage still pays
Dexus sees strong demand for prime office space Melbourne's heritage building Invicta House reopens after major revamp Private lender Zagga backs STRE's refurbishment As one of the biggest landlords in Australia, Dexus (ASX:DXS) has its finger on the pulse of the nation's commercial property scene. In its latest March quarter update, Dexus reported rising occupancy, falling leasing incentives, and a shift back to premium CBD space. The company said it's proof that 'flight to quality' is alive and kicking. Dexus' office occupancy sits at 93.2%, well above the 86.3% market average, while industrial assets are even tighter at 95.7%. And crucially, Dexus says it's collecting every cent of rent. While some landlords are still tossing in sweeteners to fill space, Dexus says it no longer needs to dangle the carrot, especially in towers like Sydney's One Farrer Place where demand is strong. The company signed 13 new leases last quarter at Australia Square, and with 76% of its office assets planted in core CBD locations, it's seeing vacancy drop in Sydney, Melbourne and Perth. Melbourne's CBD just recorded its first fall in vacancy since 2021, while Sydney rents have jumped 10% year-on-year as landlords regain the upper hand. Meanwhile, corporate downsizing is running out of puff, with sublease space now down more than 50% since the peak of the Covid shuffle. 'The outlook for Australian real asset markets continues to improve, underpinned by strong population growth, high levels of employment, constrained supply pipelines and declining interest rates,' said Dexus' CEO, Ross Du Vernet. Invicta shows there's still value in vintage While Dexus rides the return-to-office wave in shiny towers, there's a revival unfolding in Melbourne's heritage buildings. Take Invicta House, a 1920s gem tucked a stone's throw from Flinders Station, recently given a new lease on life by ST Real Estate (STRE). Once home to a silk factory, later hosting Victoria Police and even Greenhouse Backpackers, this heritage-listing still carries the layers of Melbourne's past. Now, after an 18-month transformation, it's ready to turn the page, blending old-world charm with new-school functionality in the heart of the city. STRE picked it up for $37 million in 2021, a fair bit below what Swinburne Uni paid a few years prior, and then tipped in another $2 million for a modern refit, courtesy of highly regarded builder, Dewcape. Now, Invicta is back in business – with two new restaurants downstairs, rooftop terraces up top, and spec suites ready to show off to tenants who want more than just glass and steel. The refurb also added two extra levels, bringing the total net leasable area to over 5,000 square metres, a solid upgrade for a building that's nearly 100 years old. It even received the mayoral stamp of approval. Melbourne Lord Mayor Nicholas Reece was on hand to officially re-open the building, calling it a standout example of how heritage can be reimagined without losing its soul. 'This is an iconic redevelopment that creates a New York-style destination in the renowned precinct of Flinders Lane,' ST Real Estate Managing Director, Matthew Burrows, told Stockhead. 'We wanted to both retain the historical attraction of this building while also offering A-grade-level amenities. 'To see this building through to completion is a major milestone, and we are proud to showcase a modern look to a building that next year will be 100 years old.' Heritage isn't easy, however Burrows acknowledged that heritage refurbishments are difficult. 'It's cheaper to knock it down and build a glass box, to be honest. But you don't get the same retention of the Melbourne streetscape and the heritage,' he said. 'And we're patient long-term investors, it makes sense for us to just sit and hold .' Melbourne's market, though, hasn't exactly been playing nice, and with vacancy still around 8%, it's not exactly a landlord's paradise. 'Melbourne is probably one of the sickest markets in Australia at the moment,' Burrows said, but added that supply is drying up fast and demand will likely outstrip it over the next five years. 'You'll see vacancy come back to a level that's more in equilibrium, and fairer to both parties.' Flexible funding from Zagga While the spotlight is on the building, the real story behind Invicta's comeback was how it was funded. Instead of going cap in hand to the big banks, STRE went the private credit route, and that flexibility made all the difference. 'Private credit, and in particular Zagga, provided quite a compelling option for us due to its flexibility and deep understanding of construction finance,' Burrows said. 'It actually worked better for our delivery of the project than if we dealt with the big four.' He explained that traditional banks offered cheaper rates, but came with tighter LVRs and far more hoops to jump through. The breathing room afforded by Zagga gave STRE the confidence to finish the building first before kicking off leasing. It's a strategy aimed at attracting the right A-grade tenants, who often need to see and feel the space before signing anything long term. 'Pre-committing leasing is an incredibly difficult business, as smaller, more nimble occupiers need to see a completed product. 'Zagga gave us the flexibility to fund the construction and hold back the leasing campaign until completion, giving us the opportunity to attract long-term quality tenants by allowing them to experience the space firsthand.' Now, with 80% of the building already leased, that strategy seems to be working nicely. Invicta House is proof that old buildings can still pay new dividends, if you've got the patience, the plan, and a partner who gets the job done.
Bloomberg
2 days ago
- Business
- Bloomberg
Gundlach Says Gold 'No Longer for Lunatic Survivalists'
DoubleLine Group CEO Jeffrey Gundlach says gold is the flight-to-quality asset in the US at the Bloomberg Global Credit Forum in Los Angeles. (Source: Bloomberg)
