Commercial real estate market “nearing the bottom” as major CBD office towers sell at 20 per cent discounts to peak valuePosted by On

In Melbourne, Mirvac is close to finalising a deal to sell a Collins St building, having written down its book value to around $340 million, representing a 20 per cent discount to its peak value two years ago.

“We’re probably within 5 to 10 per cent of the trough for premium and secondary buildings. There’s not much left [to go)],” Mr Maconochie said.

“The valuers are letting the air out of the tyres. We’re pretty close to letting enough air out and getting back to race ready.”

The shift to remote work combined with uncertain business conditions and surging interest rates sent office values tumbling around the world. The shakeout arrived late in Australia, with some experts flagging values could drop 25 per cent before it fully washes through.

The stock prices of ASX-listed landlords plunged in anticipation of a wipe-out, while the owners of unlisted assets, including super funds, faced pressure to write down their valuations.

Commercial property deals slumped in the past year amid a stand-off between owners and would-be buyers over pricing. Hardest hit was the trade in office towers, where transaction volumes shrank by two-thirds, dropping to below $10 billion.

Soaring interest rates and higher bond yields, along with an uncertain demand for office space as workplaces readjusted to hybrid working, cast a pall over the sector.

Corporate casualties

The disruption to the global office sector claimed some high-profile corporate casualties. Co-working hub giant WeWork

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