Commercial property trends in Newcastle
With interest rates and increased costs continuing to play a large part in our everyday discussions at present, the ongoing thoughts of a potential market recession are on the minds of many.
However, many financial experts agree that the Reserve Bank is likely to slow the increases in interest rates very soon due to the unusually large increases that have been seen in a short space of time. As with monetary policy, so it is with the commercial property industry, it is the long-term approach that is considered the path to take to protect your investment.
Recent commentary around the commercial property industry speaks of office yields slowing over 2023 due to the increase in flexible working arrangements in a post-pandemic environment. This does create a unique opportunity to provide shorter lease terms that allow for upward revisions to take place more regularly and provide a reliable recurrent income. The Newcastle market has also seen increases in office vacancy rates in the past 12 months, now rising to 11.7 percent (up from 10.8 percent) according to the Property Council of Australia, though these are still below the national average of 13.3 percent. Last month, the Property Council of Australia stated that the Newcastle office vacancy rate was a reflection of the increase in stock coming onto the market and should not be considered as indicator of an increase in tenants leaving the area. They further stated that businesses were continuing to see more regional locations such as Newcastle as attractive commercial opportunities which offer the lifestyle flexibility that more employees are searching for, indicating that the Newcastle CBD in particular would continue to prosper with the large amount of development currently taking place.
Industries such as seniors living are also being seen as having reliable recurrent incomes and we are seeing increased enquiries coming through on some of our available opportunities in line with this.
While the market continues to be cautious and monitor the macro-economic environment, it is clear that the Newcastle market remains resilient and is predicted to remain this way. Our transactions across the board remain stable and property enquiries continue to be strong. As always, an open mind to diversification of investment across industries in commercial property is always a discussion we’d be happy to have with you, whether it be aged care, retirement villages, cafes, office space, industrial opportunities or developments, our team is experienced and knowledgeable.
View the latest edition of the Commercial Collection highlighting premium commercial and industrial property opportunities currently available.