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Whether you’re considering a small open plan office in Belrose or a mixed-use property in Narraweena, commercial real estate requires an investor or owner-occupier to mull over a range of business and economic factors including location, financing conditions, and even population growth.

The fundamental driver for commercial property growth is demand, which is usually driven by an expanding population. More than 265,000 people call the Northern Beaches home, noted the 2016 Census. This figure is expected to grow by 18% over the next two decades, according to a recent media report.

Why is population growth significant?

As more people shift to a region, bigger and better shopping centres and hospitals will be built to service the growing consumer demand. More supermarkets are needed, then cafes and specialty shops, as well as more industrial and office space for support services. Likewise, more consumers mean greater demand for products, so the requirements for warehousing increase.

A healthy economy is also fundamental to successful commercial property investments. Australia has clocked up 26 years in a row of consecutive annual economic growth, making us the only developed country to achieve this distinction. Moreover, Australia is forecast to produce average annual real GDP growth of 2.8% over the next five years, the highest among major advanced economies. But wait there is more. In Australia, 15 out of 20 industries rate above global averages. This news is exceptional and means that as the Australian economy continues to grow, the demand for warehouse space, then retail, and office will continue to multiply.

The benefits of low interest rates

The Reserve Bank of Australia, once again left interest rates on hold this month at the historic low of 1.5%. This is great news for the commercial property markets on the Northern Beaches, and it appears many businesspeople and investors will continue to take advantage of low interest rates to buy commercial real estate. And in the current market, it is often cheaper to own rather than lease a commercial property.

Infrastructure development is another significant factor influencing commercial property markets on the Northern Beaches. Key drivers continue to be the construction of Northern Beaches Hospital in Frenchs Forest, due for completion soon, and the development of Dee Why Town Centre. Both projects will provide not only more jobs but also improved roads, better parking, and enhanced business opportunities.

In a market where it pays to be familiar with the local business and economic factors that will generate the best returns, expert advice is essential for both investors and owner occupiers aiming to buy commercial assets on the Northern Beaches.

If you’re considering a commercial property sale or purchase in 2018, be sure to give Raine & Horne Commercial Northern Beaches a call on (02) 9971 9000 to discuss your options.