With around nine in 10 jobs situated outside the central business district in most capital cities, suburban business precincts are being recognised as important economic hubs delivering employment, investment opportunities through property, and services to the community at large.
This trend has been recognised for many years in south-east Queensland, however, with state and local government support, Brisbane Lord Mayor Adrian Schrinner launched the Better Suburbs Initiative in 2019. This initiative is used to investigate how government can enhance suburbs via infrastructure and economic development.
Projects such as the Brisbane Metro, Cross River Rail and five bridges plan are current initiatives within south-east Queensland’s infrastructure pipeline that will facilitate better connectivity and access to the precincts.
An example of a suburban office park is Brisbane Technology Park in the outer southern suburb of Eight Mile Plains. Originally a Queensland government initiative, the precinct is now home to more than 200 companies employing an estimated 10,000 people. The park has evolved over the past 20-plus years into Queensland’s premier business park, occupying over 33 hectares and located at the junction of south-east Queensland’s three major motorways. This direct connectivity facilitates a 15-minute drive from Brisbane’s CBD and 20-minute drive from Brisbane Airport. The park continues to expand, with $150 million in new facilities planned to come online over the next 10 years bringing more jobs, amenity and services to the surrounding community.
This renewed attention by both state and local government has highlighted the investment opportunity on offer from high-quality suburban offices and provides assets to satisfy the demand from individuals to make portfolio allocations to this market segment.
It is important to note the business precincts in question must provide the following elements to attract investor money:
- direct and effective access and connectivity to surrounding transport networks,
- professional, affordable and flexible accommodation for tenants,
- amenity within close proximity, and
- abundant car parking.
From an investment perspective, however, while the fundamental elements outlined above are critical in attracting tenants, the real long-term value as a landlord is being able to retain the tenant as they grow and contract over their lifetime.
Essential to that retention is maintaining a strong relationship with the tenants, providing flexible office spaces and proactive management. As a single landlord across multiple, flexibly designed buildings, the ability to work with a range of tenants at different times throughout their business life cycle minimises vacancy and facilitates longer-term, mutually beneficial relationships. This strategy ultimately results in a better understanding of key infrastructure and amenity requirements within the given area.
This market is one Stronghold Investments knows very well. Our investment strategy for our new Stronghold Precincts Property Fund has evolved out of the team’s 35 years of experience specifically within these business precincts and implementing these learnings.
From a broader market perspective, we are also able to more effectively advocate to all levels of government for infrastructure, connectivity and investment into these same areas, leading to better social and economic outcomes for the precinct and the surrounding community alike.
Tim Dunsdon is a fund manager at Stronghold Investments.