Commercial property is moving back towards intrinsic worth, and away from the heady days of irrationality that preceded the GFC, according to Harmony Property Group's Greg Campbell.
Speaking with Australian Broker, Campbell said that in its search for commercial property in south-east Queensland, its experience was showing that this change was occurring in the market.
"Whereas in the mid-2000’s there was little consideration given to the quality of assets when the industry discussed capitalisation rates, we are now seeing a more appropriate rate spread based on quality," he said.
"For example, commercial properties then were marketed and sold based on potentially fully let income, not actual income. Empty spaces and expiring leases were marketed as if leased without any consideration of why the space was vacant nor the cost involved to fix the problem."
However, Campbell said that this "numbers game" which paid little regard to the quality of the asset was over.
"Vendors that genuinely want or need to move product are slowly accepting a new market equilibrium. Markets always come back into equilibrium; it’s only a question of how long it takes."