Repositioning Office Assets ‘Will Drive Value’

Office precincts of the future will centre on amenity and sustainability in the flight to quality, according to Urban Land Institute Australia chair Leonie Wilkinson.

Speaking ahead of the ULI Australia Summit next week, Wilkinson said while the office market was subdued, she believed repositioning assets to improve their offerings would lure tenants and employees. 

Wilkinson is senior vice president at Brookfield Asset Management and brings her strong background in investment banking and capital markets to the ULI.

Wilkinson said there were three mega trends influencing property markets—demographics, digitisation and decarbonisation. 

Increased pressure on building performance is causing a further bifurcation in the office market and Wilkinson warned asset owners to be on the front foot on ESG. 

“We’re starting to see the bifurcation of office assets play out more clearly,” Wilkinson said. 

“There’s a lot of study to show occupancy is higher in green star energy rated buildings, you can point to higher premiums in terms of occupiers and rents.

▲ Urban Land Institute Australia chair Leonie Wilkinson is senior vice president at Brookfield Asset Management.

“If you’re not on that decarbonisation journey there’s a brown discount that’s going to play out, it will become a story of obsolescence of buildings. 

“There will be tenant and capital demand for the very best office buildings. It will be hard to lease anything less than A-grade.”

Wilkinson said the digitisation of the property sector was driving better outcomes in terms of creating value for tenants and driving more efficient buildings. 

Brookfield is also using demographics and digitisation to drive its move into purpose built student accommodation and self storage markets, which Wilkinson said were significant alternative asset classes that were starting to mature in the Australian market. 

Wilknson said the ULI presented an opportunity to learn from best practice globally and network with other property professionals around the world. 

“It aligned with my values on the reason I was attracted to real estate. It’s tangible, and there’s an openness and transparency,” she said. 

“The more I learned about underlying assets and the way so much of that value is underpinned by what you can do at an asset level, ULI gave me great insight into how that is done and how you can bring best practice. It’s genuinely been about openly sharing what you have learned and what you could have done better.” 

The Urban Developer is proud to be a ULI Australia Summit Partner. The summit will be held May 3 to 4 in Sydney. For more details visit ULI Australia.