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Bayside commercial property in demand as values increase 26 per cent

The past year has been a strong period of commercial sales for the Bayside region with local and interstate investors looking to capitalise on Queensland’s improving economy.

Ray White Commercial head of research Vanessa Rader said Queensland commercial assets represented secure investments for buyers.

“Private buyers have emerged from further afield, with interstate investors looking to capitalise on the improving Queensland economy based on its limited lockdowns and disruption to business compared to the other eastern states,” Ms Rader said.

“While we saw some increases in commercial vacancies last year, it’s been encouraging to see new and emerging businesses looking to take-up space in the Bayside region.

“The attractive lifestyle benefits of the area have aided population growth and boosted business demand.”

The Bayside region has monitored $119.06 million of commercial sales, across 100 transactions, in the first three quarters of 2021, excluding the $160 million Victoria Point Town Centre sale.

This result is already well ahead of the full year results achieved in 2016-2019, and quickly approaching the 2020 full calendar year turnover of $138.16 million.

“Industrial remains the most sought-after asset in this area, with owner-occupiers and smaller investors actively pursuing these assets at the sub- $1.5 million price point,” Ms Rader said.

“Preliminary sales data for Q3 is recorded at $29.60 million, with half of all transactions for industrial assets with an average sale price of just over $1 million, highlighting demand by owner-occupiers and private investors in this more affordable price point.

“The greatest demand has been in the Capalaba region, notably for industrial stock.”

Ms Rader said Cleveland had seen a mix of asset sales with a high proportion of office and retail properties changing hands.

“This highlights a renewed strength of these asset classes which were initially impacted by COVID-19, but rebounding tenant demand has kept occupancy high,” she said.

“With office sales only representing 6.52 per cent of all transactions in 2020, confidence has returned for this asset class which now accounts for 28.77 per cent of sales, made up of a combination of freehold assets and smaller strata office suites.

“Last year we saw a number of bulky goods retail assets transact, growing retail sales; this year there has been an increased volume of smaller strip shops in the sub-$2 million price point.”

Alternative assets such as childcare and medical continue to be in strong demand by investors, making up 4.9 per cent of Ray White Bayside’s total transitions in the first three quarters of 2021.

“We expect to see these total volume levels increase by the end of the year,” Ms Rader said.

As both local and interstate investors vie for quality commercial property in the Bayside region in 2021, Ms Rader said the commercial market had seen a rapid increase in capital values across all asset classes.

“This has been instrumental in pressuring yields down, with some assets achieving yields in the sub-5.00 per cent range,” she said.

“Owner-occupiers have also looked to capitalise on the low interest rate environment and the weight of funds available in the marketplace, particularly as tenant demand has improved with businesses looking to shelter from possible rent increases.”

The average value for industrial space in the Bayside region is up 26.59 per cent from 2020, sitting at $3632sqm.

“This year, the range in values has increased to $1,700/sqm – $7,500/sqm,” Ms Rader said.

“This broad range is indicative of the various asset types, sizes and quality.

“The lower end is typically representative of industrial property, while the upper range continues to be challenged, particularly for retail and medical use assets.”

Ray White Commercial Bayside director Nathan Moore said the region’s market had continued its stellar run throughout 2021.

“Stock remains at historically low levels, with significant price growth due to strong competition for all classes of commercial assets,” Mr Moore said.

“Owner-occupiers in particular have driven the sub $1m industrial/warehouse market to levels not previously seen.

“Pressure is building on council to consider the rezoning of future industrial land to provide employment hubs for our expanding population.”

Mr Moore said the market had seen an escalation in the numbers of buyers and tenants competing for stock.

“Both fully leased investment stock and owner/occupier industrial/warehouse type product have been the standout performers,” he said.

“Cheap money and the relative stability of the SEQ economy through the pandemic have given buyers confidence to press ahead.”

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