Where in the Bayside commercial market can you take advantage of the current low interest rate?
The RBA interest rate is the lowest it has been in 35 years. Are you one of the large numbers of people entering the market or adding to existing property portfolios?
Here’s where you should be looking now…and where you should be looking next:
Enquiry levels in the industrial property market have been steadily rising, especially for tenanted investments.
More investors than ever are entering the market, which has lead to a large pool of unsatisfied buyers. In particular, Self Managed Superannuation Funds (SMSFs), who can no longer survive on bank interest rates and are looking for alternative methods of increasing their retirement income.
Buyers are now more accepting of lower investment returns, as low as 6-7%, provided there is a strong lease (3+ years) in place.
Let’s look at Capalaba.
Capalaba is still a tightly held industrial community, offering easy access to the Gateway and airport with an abundance of established trade services and supply companies.
12 months ago, you’d never have seen this – sales prices in Capalaba of up to $2,000/m2.
‘A’ grade tilt panel strata titled units in the size range of 100-150m2 are achieving prices between $2,000 - $2,500/m2. ‘B’ grade tilt panel strata titled units are achieving 10-20% less.
The challenge starts with strata titled units between 150-350m2. Owner operators are only picking quality in this area of the market - units with easy access, good parking and quality office fit out.
(Looking for free standing buildings in Capalaba and Cleveland? So are we. There’s currently a shortage.)
We are receiving our strongest enquiries in the industrial leasing market for strata titled units below 300m2. Currently we are achieving $120 - $130/m2 net for ‘A’ grade units, while ‘B’ grade units are attracting lower leasing rates of $100-$110/m2 net.
Where should you be looking if you’re an importer or small manufacturer?
There is currently an abundance of large warehouse/manufacturing space in Cleveland, which is allowing for first-time-ever leasing rates of less than $75/m2 net.
SHOWROOM/BULKY GOODS – LEASING
If you’re looking in this specific market you’ll need to be prepared to move quickly, as there are limited options. When a quality property becomes available, tenants are quick to move.
(Quick tip: If you’re looking at properties on Redland Bay Road, you’ll have to act immediately.)
Limited good quality strata titled properties have made retail and office sales slow. Capalaba has a very short supply of available properties for sale; Cleveland has a greater supply, but less demand due to the area’s smaller population.
Retail enquiries have so far been low due to the lack of confidence in the retail/office leasing marketplace. Office space in particular has been very slow to take up in the early part of 2015.
Good news on the horizon, however. A large number of government-funded grants has seen enquiries for office space boom over recent weeks. Expected take ups from these enquiries will be finalised before the end of June. Contact us if you’d like those numbers.
Raine & Horne Commercial knows local and regional property markets intimately, with the support and systems of a long-established national and international property group. Our clients benefit from our network strength, which allows substantial cross-flow of international referral, advice and investment.