Dexus Rides Wave of High Office Demand

ASX-listed property trust Dexus has affirmed its guidance for the year following the release of its March 2018 quarter portfolio update which has seen it book a lift in office portfolio occupancy to 96.8 per cent.

The company leased 92,822sq m of office space and 14,832sq m of office development space, across 73 transactions. Its industrial portfolio occupancy increased to 97.9 per cent, up from 97.5 per cent in the December quarter after leasing 46,645sq m of industrial space across 24 transactions.

“It’s pleasing to see great traction across the key areas of our business which will contribute to our distribution per security growth guidance of 4.5-5 per cent for FY18,” Dexus’ chief executive officer Darren Steinberg said.

“This has been driven by continued leasing in our core markets and solid progress on opportunities in our development and trading pipeline.”

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Dexus also said it had reached key milestones across the group’s $4.2 billion pipeline including finalising settlement on 105 Philip Street, Parramatta.

It also received Queensland government support for its $1.4 billion Waterfront Precinct proposal to progress Brisbane’s Eagle Street Pier to the next stage under the Market-Led-Proposal Program.

The company received stage one approval of the for its mixed-use development at 201 Elizabeth Street, Sydney.

Dexus also commenced construction of a new office development at 180 Flinders Street, Melbourne after securing John Holland as an anchor tenant.

Office Portfolio

“Positive dynamics have remained constant in all of our core office markets, with strong levels of enquiry continuing to convert to leasing in Perth as tenants choose to upgrade to better quality buildings and centralise into the CBD,” Dexus executive general manager Kevin George said.

“In the three-month period, average incentives across the office portfolio reduced, reflecting the quantum of effective leasing deals undertaken in Sydney where we recorded incentives of 11.5% compared to Melbourne and Brisbane which recorded 19.2% and 21.7% respectively.”

Dexus, like most office landlords currently, are benefiting from low vacancy rates coupled with high demand for space which is underpinned by population growth in the main capital cities.