Centuria Property will launch its $200 million Metro Diversified Fund in the coming month. The fund will own an initial eight industrial and commercial properties, with a focus along the eastern seaboard.
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It will be run by Nick Collishaw, the former head of Mirvac, and will form the listed platform for the Centuria Property Funds empire. It will aim for a yield of about 8.25 per cent and low gearing of about 25 per cent.
Jason Huljich, chief executive of Centuria Property Funds, said the listed vehicle will add diversity to the group, which also has 21 wholesale funds, with assets spread across NSW and Victoria.
Mr Huljich said the latest acquisitions of 173 Castlereagh Street and 10 Spring Street, Sydney, have all been leased 100 per cent through recent deals at competitive rents.
"In the two properties, we have separated the vacant floors into speculative suites to cater for the demand, in capital cities, of small to medium tenants, including the listed financial services group OneView and financial commentator Peter Switzer," Mr Hiljich said.
"The leasing markets in the small to medium sector remains strong, particularly from legal and financial consultants, accountants and the new property entrepreneurs."
Mr Huljich said while there are companies looking for large spaces, including Google, which wants about 60,000 square metres and is said to be looking at the Australian Technology Park at Redfern, incentives in rents remain competitive.
Other groups looking for new digs include Insurance Australia Group, which is at present at 380 George Street and is said to be looking at Darling Park Tower 2 or 680 George Street, and UBS, which is at Chifley Tower.
Westpac's excess staff from 275 Kent Street, which are not included in the move to Barangaroo, are said to be looking at moving to the 40,000 sq m Grocon development at Darling Harbour, known as the Ribbon.
The leasing and new fund launches, including GPT's recent Metro Office, comes as valuers, fund managers, property financiers and property analysts see foreign investment as a significant to very significant driver for the current increased demand and prices for Sydney and Melbourne residential property, according to the respondents in the Australian Property Institute's 33rd survey on property directions.
The survey found that commercial property in Sydney is currently seen as being the furthest along the rise of the property cycle, with Melbourne beginning to rise and with Brisbane at the bottom of the cycle.
Tyrone Hodge, API NSW president, said market values are expected to increase at a faster rate than predicted in May for Melbourne CBD and suburban CBD commercial, industrial and retail property. "Market rents for Melbourne CBD and suburban CBD commercial property are expected to decline but at a slower rate than in May, while increasing slowly for industrial and retail property," Mr Hodge said.
