Newcastle industrial vacancy rates dipping says Raine & Horne Industrial Average
Media release - 24 February, 2017
- Industrial property vacancy rates in Newcastle dropped to 6.3% in January 2017, according to the Raine & Horne Industrial Average
- The fall occurred despite the addition of 86,000 square metres of industrial space in Newcastle.
- Mayfield West recorded the biggest fall from 18.8% to 11.2%.
Newcastle, NSW (24 February, 2017) – Leading Hunter commercial real estate firm Raine & Horne Commercial Newcastle has released the 2017 Raine & Horne Industrial Average, which shows that vacancy rates in many of the city’s industrial property markets have fallen significantly since the beginning of 2016.
The Raine & Horne Industrial Average, an annual measurement of vacancies in the major industrial estates in Newcastle, showed that the city’s average vacancy rate fell from 7.6% in March 2016 to 6.3% in January 2017.
According to index author, Steve Dick, Co-principal, Raine & Horne Commercial Newcastle, this reduction has occurred despite the addition of 86,000 square metres of industrial space in the city in the last three years. Additionally, 42,800 square metres of vacant industrial space has been leased or sold in the past 12 months alone.
“Only the relative secondary market of Sandgate bucked the Newcastle-wide trend, with vacancy rates rising from 1% to 2.6%,” said Mr Dick.
The biggest fall was recorded in Mayfield West, where the vacancy rate tumbled from 18.8% to11.2%. Beresfield also recorded a sizeable contraction in vacancy rates from 10.1% to 6.2%.
In more good news, the Hunter’s unemployment rate has fallen from 9.8% in April 2015 to less than 5.0% in 2017. The population of the Newcastle and the Hunter is forecast to grow by 17% between 2016 and 2036 reaching almost 800,000 residents, and the state government is spending millions of dollars on infrastructure including an inner city light rail for Newcastle.
“Adding to the spirit of renewal, the broader Newcastle market is enjoying an improved level of confidence following increases to the price of coal,” said Mr Dick.
At the start of 2017, average yields range from 7.25% for retail property and 8.0% for office, rising to 8.25% for industrial property.
“Yields have pushed lower and are closer to borrowing rates. Cash buyers may drive this lower but only marginally, and Newcastle has not seen the large volumes of international buyers that have been experienced in other cities,” said Mr Dick.
“Demand for industrial property in Newcastle is coming more from industrial services and transport companies rather than traditional manufacturing firms.”
Self-managed super funds are driving the owner occupier market in the industrial and commercial sectors in the sub-$2 million market.
“Well-placed existing commercial buildings close to the Newcastle CBD are worth a look at present,” said Mr Dick.
“Increased infrastructure spending, massive private spending on apartment complexes and the near completion of the University of Newcastle’s law and business faculty building is making the CBD a growth market.”
Table 1: Raine & Horne Industrial Average
|Suburb||Mar-16 Vacancy Rates (%)||Jan-17 Vacancy Rates (%)|
For further media information contact:
Steve Dick, Co-Principal, Raine & Horne Commercial Newcastle on 0425 302 771