06/03/2023

TAKE NOTE IF YOU WANT TO INVEST

Commercial property is a popular investment thanks to the historically higher rental returns, longer leases, and lower expenses than residential property, however, there’s no doubt the Australian market has been shaken by rising inflation, interest rate hikes, and recession fears. Still, the outlook is good. If you’ve decided to invest, here’s what you need to know.

Office

The COVID-19 pandemic has brought about huge changes in the office space realm, with many businesses finding that operational functions can be maintained with employees working from home, leading to a dramatic increase in office vacancies. While some employees have returned to the office, a large number are still opting for remote work 2-3 days a week – this is further evidenced by data from a survey of over 630,000 workers across Australia which found that just 7% of employers expected their staff to be present in the workplace for five days a week. Properties with the following features are most popular:

  • Close to restaurants and retail.
  • Near transportation or plenty of staff parking.
  • Surrounded with natural light.
  • Well-maintained (saving maintenance expenses)

Retail

COVID-19 had a hefty effect on the retail sector, with stringent lockdowns keeping physical stores closed for months which resulted in many businesses having to close their doors for good. This period pushed consumers to shop more often online but since then, the market has seen a resurgence. Retail sales have dramatically increased this year, with spending reaching record highs according to the Australian Bureau of Statistics. However, it is uncertain whether this trend can be sustained as much of the activity can be attributed to the build-up of cash savings when restrictions were preventing people from travelling or dining out. Properties with the following features are most popular:

  • Plenty of parking
  • Visible from a busy road
  • Low vacancy rates
  • With excellent anchor tenants
  • Affluent location
  • In high-growth areas
  • Occupied by long-term tenants

Industrial

Industrial and logistics properties have proven to be extremely popular investments in recent years, with demand for warehouses and logistics facilities soaring due to the growth of e-commerce and onshoring. Research has found that Australia has a “chronic shortage” in this area, with its national industrial and logistics vacancy rate reaching a record low of 0.8%. Investing in an industrial property comes with many considerations, such as the quality of road networks connecting tenants to metropolitan areas, ports and cargo docks; the economy; access to necessary infrastructure; and interest rates.  Properties with the following features are most popular:

  • Near food outlets and other amenities
  • With an office, kitchen, toilets, and air conditioning
  • Includes a heavy-vehicle-accessible loading dock
  • No extra fees for water, discharge, and noise
  • Enviro friendly
  • Flexible layouts
  • High ceilings