The new year is shaping as a challenging time for players in Melbourne’s commercial property market with well-considered divestment strategies more critical than ever to successful outcomes, however the market should see some stability from mid-2024, according to Advise Transact Asia Pacific Managing Director, Mark Wizel.

“Uncertainty continues to increase across the social, political and economic environments and this spells a degree of volatility and risk for commercial property in 2023 which is currently difficult to gauge.

"In essence what we are seeing is the cumulative effects of interest rate rises combined with labor shortages, the increased cost of fuel, goods, services and utilities and the ongoing impact of COVID-19,’’ he said.

Mr Wizel said his business - Advise Transact - had managed in excess of $1.5 billion in commercial property divestments across a broad range of commercial market sectors over what  had been "three very difficult Covid years’’.

He said, while his team expected the market to settle and return to a more stable position from around mid-2024, commercial property owners would need to devise a carefully thought out and articulated plan, based on a full understanding of current market conditions, when looking to either reposition or divest current assets. Having done so owners should still be able to achieve strong outcomes, he said.

“Preparation, organization and execution of a well thought through and strategic sales and marketing campaign will be absolutely critical in helping to mitigate the potential downsides of any market turbulence.

“The upside is that such a disciplined strategy could well provide owners who are looking to divest a property or properties with potentially 20 per cent more than what they might have otherwise achieved,’’ Mr Wizel said.

Mr Wizel said real estate agents would also need to take a closer look at the peculiar characteristics of the new market in order to provide the best service to owners.

“Over the past decade we have all seen a continued stream of glitzy and glamourous marketing materials across the commercial property sector that have, by and large, been very successful in assisting vendors and their agents to entice buyers and achieve results.

“The challenge we face in 2023 and 2024 is that an enquiry from an interested party will need to be handled very differently to that of enquiries handled in the preceding 10 plus years.

“Estate agents will need to show a new level of patience, of poise and skill if they are to get the result that any given commercial property owner is seeking,’’ Mr Wizel said.

He said property owners would also benefit from a fine tuning of their commercial property portfolios in order to enhance the position and potential returns of particular properties in what was a unique market in extraordinary times.  

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He said there were a number of elements owners might want to consider including:

• Portfolio analysis - Does your portfolio need to be reviewed to discover opportunities or threats to any of your properties?
• Financial analysis – Undertake a full review of all income, leases, and outgoings and seek detailed feedback on potential areas of opportunity and potential concern.
• Overview of leases & strategic leasing advise – look at either a completely new approach to leasing a property or review existing leases in terms of extending, terminating or improving leases.
•  Market value & demand assessment – overview the current market status of your assets including likely currently value and likely demand should you be considering divestment.
• Transaction Management – seek professional advice when considering divestment
• Engaging commercial sector professionals - choose wisely when engaging commercial property sector professionals including estate agents (leasing and selling), architects, town planners, project managers, and builders when looking to add value and drive potential price realisations when selling.
•  Independent advice – seek the best independent advice

Mr Wizel formed Advise Transact with long-time associate and former CBRE National Director (Asian Desk), Lewis Tong, in 2020, and has since recruited Executive Ashley McIntyre who also served time at CBRE.

Advise Transact has been appointed to manage the sale of the Queenscliff Harbour.

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2023 a challenging time for commercial market - Disciplined divestment strategies critical says Mark Wizel