Positive signs for Mackay’s industrial sector

April, 2018 by

Positive signs for Mackay’s industrial sector

An improving industrial market in sales and leasing is leading the way in Mackay.

Predominantly driven by good coal prices and some infrastructure projects in the region, businesses are now feeling more confident.

Des Besanko of Commercial Mackay says, “There’s been some reinvestment because after many years of corporations tightening their belts and extracting a lot of coal, they are now reinvesting back into maintenance and also increasing their capital equipment expenditure to meet high coal demand. This bodes well for the Mackay service industry.

“They’re finally getting a good price again. So that’s giving them a bit of freedom. So after many of years of streamlining labour costs and making things more efficient, they now have free cash to put into maintenance and capital equipment. So that’s part of the cycle of what’s happening.”

With most vacant ‘standalone’ facilities now tenanted, companies are now also exploring the option of buying land and constructing a new facility.

Des says investors struggling to find properties in Brisbane, were turning to regional areas and were keen to buy as long as a good lease covenant was in place.

Average yields in Mackay are about 9.0 to 9.5 % and as the market improves, owners will feel confident about selling assets and achieving a decent sale price, Des believes.

The return of confidence to the industrial sector has bought more people to Mackay for employment, which in turn was having a positive impact on the retail and residential markets, notes Des.

 

Industrial sales heating up in the Sutherland Shire

April, 2018 by

Anthony Bouteris, Co-Principal at Raine & Horne Commercial Sutherland Shire says industrial sales are going from strength to strength.

Delivering robust yields of 5.0%, industrial buildings were spending very few days on the market. Most notably, a 15-year-old factory unit in Northumberland Drive in Caringbah, with a 10-year lease and a five year option, and a net rent of $180,000 per annum, sold for $3.2 million in just two weeks.

Sales under $5 million were mainly driven by local investors and self-managed super funds. Sales in this price range were achieving yields between 4.5 to 5.0 %.

After one week on the market, a free-standing 500 square metre building was snapped up for $1,975,000. Situated on 740 square metres of land, number 20 Erskine Road, Caringbah had a two-year lease, with a five-year option.

According to Anthony, a lack of stock is an issue within the office market so people considering selling office space should make that leap.

Meanwhile, yields in the retail market were between 5.0 – 6.0 %, with little change in the past 12 months.

Quality office space in short supply Australian Capital Territory

April, 2018 by

Canberra’s office market remains tightly held, with buyer demand outstripping supply.

In this robust and competitive market, quality properties are a rare commodity.

Nick Cotis of Raine & Horne Commercial Canberra says, “On the sale side, we can’t find enough quality properties to sell. They’re very tightly held as usual.”

However, a significant sale – with a ten-year lease to the government – is an exception. It has garnered strong interest from many groups worldwide and is expected to fetch about $30 million.

Office vacancy rates have stabilised at about 9.5%, with A-grade office space at 8.9% and B-and-C-grade around 12.8%.

Several older-style office buildings are in the midst of refurbishment, while A-grade stock is in limited supply.

Nick observes with fewer A-grade buildings expected to hit the market in the next couple of years, many C-and-D-grade buildings were in need of re-purposing or a refurbishment.

Meanwhile, Nick notes that the industrial sector has remained strong. “Mitchell, on the northern side of Canberra, is almost full up. It’s hard to find anything reasonable for lease there now,” he explained. “Yields range from 7.0 to 8.5 % for retail, 8 to 9.0 % industrial, and 6.5 to 10 % for office.”

New commercial development underpins new industrial estate in Perth

March, 2018 by

The transformation of a “derelict” site into a new industrial estate in Bayswater is expected to be completed by mid-2018, Anthony Vulinovich, Director of Raine & Horne Commercial Western Australia told the Eastern Reporter.

Developer Linc Property’s Tonkin Highway Industrial Estate on Railway Parade is located eight kilometres east of the Perth CBD, three kilometres from Perth Airport and provides connections to Roe, Reid, Great Eastern, and Leach highways.

The development of the first stage of the 1884 square metre site is expected to finish soon. The estate will feature landscaped public open spaces, entry statements, on-street parking, street trees and general industrial zoned lots sized between 1200 square metre and 2 hectares.

Anthony Vulinovich told the Eastern Reporter that construction of stage 2 had started after works began in January 2017. “On an aesthetic front, it transforms a derelict industrial site into a brand new, connected, industrial estate that can accommodate a variety of uses and bespoke property designs that will present well to both the Tonkin Hwy and Guildford Road traffic.”

Commercially, Anthony says the developments “will further establish the area as a key metropolitan industrial precinct, providing increased employment opportunities and business opportunities for the surrounding and broader areas.”

Optimism for Adelaide commercial markets

March, 2018 by

Optimism is being bandied around as the word that best describes commercial property markets in Adelaide, according to David Ente, Director of Raine & Horne Commercial South Australia. 

 

“However, we must first negotiate the South Australian Election in March, as state or federal polls often force the brakes down on commercial activity,” said David. “Having said that there is a bit of business optimism around Adelaide, which seems to be encouraging some commercial market activity. Moreover, this optimism continues to prevail despite some of the seemingly pie in the sky infrastructure promises that have been offered up by electioneering politicians.”

 

Properties valued under $1 million represented the strongest commercial market in Adelaide, noted David. “Given interest rates are low, we are seeing either owner-occupiers buying commercial properties, or alternatively, business owners using a self-managed super fund to acquire a location

Self-managed super funds to lead the charge into commercial property

March, 2018 by

Commercial real will be on the investment menu for self-managed super funds in South East Queensland, in 2018.

“Commercial properties in the City of Logan priced between $200,000 – $1.5 million will continue to attract DIY super finds in 2018,” said John Tamblyn, Joint Managing Director of Raine & Horne Commercial Beenleigh. “SMSF members are seeking yields of 6-8%, which compare favourably to residential returns.

“At the same time, share market volatility is attracting SMSF capital away from equities and into commercial property.

Investors, including those using DIY super funds, represent about 75% of the Beenleigh commercial property marketplace, noted John. “That said, low-interest rates compared to the cost of a lease were a factor in some owner-occupiers choosing to become their own landlords.”

 

Lowest industrial property vacancies in five years for the Hunter

March, 2018 by

Industrial property vacancy rates fell dramatically in 2017 in Newcastle, NSW’s second largest city, according to a report tabulated by Raine & Horne Commercial Newcastle.

A surge in spending by the Hunter region’s mining industry contributed significantly to the drop in industrial vacancy rates, according to the 2018 Raine & Horne Industrial Average, an annual measurement of vacancies in the major industrial estates in Newcastle. The report shows that vacancy rates are 4.53% for the Hunter in early 2018, which is down from an average of 5.32% in 2017 and 7.56% two years ago.

The Rutherford area recorded significant vacancy falls from 4.43% in 2017 to 2.13%. Located west of Maitland, Rutherford readily services and supplies the region’s mines and draws on a well-priced workforce, according to Paul Tilden, Industrial Specialist, Raine & Horne Commercial Newcastle. “When employment becomes tighter, and the mines start attracting workers through higher wages, ancillary companies closer to the mines can expect a skills shortage, and that’s where Rutherford comes into its own. Rutherford provides access to the mines while being close to workers’ families,” said Paul.

Australian commercial property market notches up FY gains of up to 30%

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December, 2017 by

Raine & Horne Commercial with the help of Australian radio legend Ray Hadley, has launched the latest edition of Commercial Insights, a comprehensive look at how commercial property markets are faring across the nation. 

Commercial Insights describes the three main factors driving commercial property: low interest rates, infrastructure projects, and a tightening supply of commercial assets.

Low commercial lending rates

Angus Raine, Executive Chairman of Raine and Horne Group, says, “Low interest rates are giving small- to medium-sized businesses a real opportunity to own their premises and enjoy security of tenure. As the asset is often held by the proprietor’s self-managed super fund, businesses can benefit from off-balance sheet financing while fund trustees have greater control of yields on their retirement savings.”

The positive impact of infrastructure

Angus explains, “The impact of infrastructure on the commercial property market is not just significant, it can also be surprisingly far-reaching. Raine & Horne Commercial Erina (Central Coast NSW), for instance, is receiving enquiries from investors as far away as Western Sydney, who are hoping to capitalise on the NorthConnex project linking the M1 to the M2 in Sydney.”

Tight supply of stock

In state capitals such as Sydney, strong returns on residential property have seen several commercial assets earmarked for redevelopment as residential dwellings. This trend is especially notable in Sydney’s inner west and south, where values are being driven higher. As a guide, Raine & Horne Commercial South Sydney/Marrickville recently managed the sale of 401-405 Illawarra Road, Marrickville, achieving a sale at auction for $350,000 above the reserve price.

FY2017 capital growth of up to 30% 

Commercial property is delivering varying gains around the country, and Sydney is recording particularly buoyant conditions. Angus said, “Commercial values in North Sydney are expected to rise by 15.0% for FY2017. Commercial assets on Sydney’s Northern Beaches could see an uptick in value of as much as 30.0% for FY2017.”

To download a copy of Raine & Horne Commercial’s latest property market report, visit http://www.imags.com.au/rh_commercial_insights/

Foreign buyers and businesses seek regional commercial opportunities

Foreign buyers and businesses seek regional commercial opportunities

December, 2017 by

The latest issue of Commercial Insights found that regional commercial markets around Australia are enjoying a purple patch due to a combination of price affordability and decent yields.

Michael Parisi of Commercial Gold Coast says yields are ranging from 5.0% on retail assets to 8.0% for office and industrial properties. He believes these yields will remain stable for the remainder of 2017. Gold Coast vacancy rates vary according to location but broadly, range from as low as 5.0% for retail and industrial assets to 10.0% for office properties.

Foreign investors are showing interest in the Gold Coast, accounting for between 25% and 30% of property sales, typically in the $2-20 million price range. Self-managed super funds are also active buyers though with a focus on the sub-$2 million market and a preference for retail strip assets.

Nick Koenig of Commercial Toowoomba says yields on retail and office assets are currently in the order of 7.0-8.0% rising to 8.0-8.5% for office assets. According to Nick, “Generally there is an oversupply of commercial and retail space, and this has affected lease pricing. Landlords are offering generous incentives, and this makes now a great time for businesses to relocate to Toowoomba and the Darling Downs or Surat Basin regions. Some great lease deals are available.”

The region is benefiting from several infrastructure developments including the $1.45 billion Toowoomba Bypass and the $8.4 billion National Inland Rail Link/Interlink SEQ, which will lend support to the local economy and commercial property market.

In Southern NSW, “Commercial buyers are reasonably active. Properties with good tenants and long leases in place are selling at lower yields. A multi-tenanted bulky goods site situated near the Wagga Wagga CBD, with national tenants including The Good Guys and BCF recently sold for a 7.5% net yield,” said Phillip Thompson of Commercial Wagga.

In terms of which segment of the market holds good prospects, Phillip points to retail assets saying, “Retail has always been reasonably strong in Wagga Wagga, particularly in the main street surrounding the two central shopping centres. These properties demand a good rental and yields are reasonable. Good stock is tightly held and therefore limited in supply.”

To find out more about the state of play in many of Australia’s biggest regional population centres, download a copy of Raine & Horne Commercial’s latest property market report, visit http://www.imags.com.au/rh_commercial_insights/

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