Hi there! Welcome to the new look Pendal website... Take a two minute tour to see what we’ve changed.

Mainstream Online Web Portal

Investors can view their accounts online via a secure web portal. After registering, you can access your account balances, periodical statements, tax statements, transaction histories and distribution statements / details.
Advisers will also have access to view their clients’ accounts online via the secure web portal.

Office property opportunities can still be found as work-from-home tensions play out

The world of office space provides plenty of challenges, but also opportunities if you know where to look, argues Pendal’s JULIA FORREST

OFFICE space is on the mind of many businesses as work-from-home tension between workers and bosses plays out.

Commercial property, and specifically office property in Australia, has had a challenging time since the pandemic.

The Covid-driven work-from-home phenomenon, along with rising interest rates, have created a very different environment for the sector.

“It’s been very hard to get people back into the office,” says Julia Forrest, who co-manages Pendal’s property securities funds.

“It seems to be more difficult in Melbourne than anywhere else.”

“The physical occupancy in Melbourne is running at about 47 per cent, though recently there have been some big employers mandating staff to be back in the office 50 per cent of the time,” she says.

“That will help.

“Physical occupancy is still pretty low in government because staff have only been mandated to come back into the office one in every five days. That has an impact on retail services and amenities.”

The doubt over the number of days people are spending in the office has made it difficult for government and the private sector to re-sign leases.

It isn’t clear what the demand for space will be in 12 months or two years, let alone five years.

Find out about

Pendal Property
Securities Fund

“Up until recently, we have just seen tenants sign short term leases because they’re not confident about what their occupancy needs will be.

“Landlords have been willingly accepting two-year leases, which they haven’t done in the past, and in some cases one-year leases,” Forrest says.

These short-term leases affect long term returns, but also the amount of finance a landlord can get against a property asset. It’s also triggered creativity between landlords and tenants.

“We’ve seen large tenants commit to new buildings and large amounts of space, and they’ve negotiated contraction rights – the ability to hand back floors,” Forrest says.

“That’s not new in itself. What is different is that they have the ability to reduce the amount of space, even before they occupy the building. Until now, there’s never been contraction rights before commencement.”

Opportunities remain

Forrest says there are still opportunities to find good returns in commercial property, citing 555 Collins Street in Melbourne which has just been developed.

It has a good range on tenants, including Amazon, will open close to fully tenanted, and the construction contract was well negotiated, she says.

Midcaps on
the move

Hear from lithium industry pioneer
Ken Brinsden and Pendal’s
Brenton Saunders

On-demand webinar

“Obviously it’s a tenants market, but office landlords are being a bit more creative. I don’t think things are getting worse, but I do think things will stay tough for quite a while,” Forrest says.

Proeprty investors shold also keep an eye on the unemployment rate.

“Normally you see elevated vacancy rates when unemployment is high,” Forrest says.

“The problem is you have vacancy rates high when unemployment is at 50-year lows, so there’s not a whole lot of employment growth coming through that’s going to fill the space.”

About Julia Forrest, Pete Davidson and Pendal Property Securities Fund

Julia Forrest has managed Pendal’s property trust portfolios for more than a decade. She has 25 years of experience spanning equities research and advisory, initial public offerings and capital raisings.

Pete Davidson is Pendal’s Head of Listed Property. Over the past 34 years Pete has held financial markets roles spanning portfolio management, advisory and treasury markets. he specialises in the property, retail, insurance and infrastructure sectors.

Pendal Property Securities Fund invests mainly in Australian listed property securities including listed property trusts, developers and infrastructure investments.

Pendal is a global investment management business focused on delivering superior investment returns for our clients through active management.

Contact a Pendal key account manager here

This information has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and is current at May 31, 2023. PFSL is the responsible entity and issuer of units in the Pendal Property Securities Fund (Fund) ARSN: 087 593 584. A product disclosure statement (PDS) is available for the Fund and can be obtained by calling 1300 346 821 or visiting www.pendalgroup.com. The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo.

You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund. An investment in the Fund or any of the funds referred to in this web page is subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested.

This information is for general purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation. The information may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date.

While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information. Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs.

Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance. Any projections are predictive only and should not be relied upon when making an investment decision or recommendation.

While we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections. For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website www.pendalgroup.com

Keep updated
Sign up to receive the latest news and views