Commercial and Industrial Property Portfolio Q2 2024

The latest edition of the Commercial Collection showcases the region’s best commercial property opportunities. We have seen an overall improvement in market sentiment in the first half of the year, which is resulting in a large amount of new enquiry and activity in market.

This can be seen in the recent results from the 2024 Lender Sentiment Survey conducted by our finance partner Stamford Capital. 42% of lender respondents stated that they are expecting an increase in investment lending from major banks and 64% are expecting an increase from non-bank lenders. There is also a strong sentiment from lenders that the Commercial office sector is continuing to move towards recovery across the capital cities, further underpinning positive sentiment.

The Property Council of Australia recently shared statistics on a rise in the office market vacancy rate in non-CBD areas nationally from 17.3% to 17.9% and CBD vacancy from 8.2-8.3% although this is largely due to an increase in supply rather than a decrease in demand. As with the Newcastle office market, there is a national trend in the office market of tenants migrating towards high grade offices, leading to a need for greater incentives to be offered to secure quality tenants. Secondary grade building owners require capital expenditure for both tenant retention and amenity improvement.

The retail and hospitality sectors are also seeing positive impacts from the uplift in market sentiment with leasing activity on the rise. This is in line with the trend for more consumers to favour a mixed online and in person approach to their shopping behaviours post pandemic.

The Newcastle industrial market remains resilient, particularly for workshop and warehouse spaces between 1000 sqm to 5000 sqm. Most transactions are driven by expansion requirements, interstate relocations, and a flight to quality. Active industries fuelling this demand include mining services, transport, construction, and various trade sectors. This trend underscores Newcastle's position as a key commercial hub, with businesses seeking larger, modern spaces to support their growing operations and improve efficiency.

This market dynamic continues to exert upward pressure on rents, benefiting landlords and developers. Investment yields remain low based on projected rental growth, reflecting the high level of competition for quality assets.

The availability of industrial land for sale remains limited, with supply primarily coming from resales within established industrial estates and recently developed subdivisions. Most land released to the market is offered as leasing opportunities, allowing businesses to occupy new or customised facilities.

Speak with our sales and leasing team today to learn more about the opportunities in this quarter’s Commercial Collection.