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Demand for Hunter commercial real estate benefiting from falling share markets

September 11, 2022

Commercial markets in the Hunter region of NSW are enjoying a burst of activity as investors seek a haven from interest rate hikes and share market volatility. 

 According to Warren Plumb, Partner, Raine & Horne Commercial Newcastle, demand for commercial real estate is across the board, with industrial properties in Morissett and Cardiff among the star turns. 

 “With the assistance of Raine & Horne’s industry-first digital marketing platform Amplify, we sold an industrial unit off-market at 2/5 Ranton Street, Cardiff to a buyer for around $500,000 within two days,” Warren said. 

 “We have also sold multiple units at 61 Gateway Boulevarde, Morisset off-the plan. These properties are selling for $4,000 square metres, an unheard-of rate for Newcastle. The signboards aren’t even up, and we’ve sold a half dozen of these properties.”

 Warren believes demand for Hunter commercial property is being driven in part by the ongoing migration of people away from the larger capital cities.

 “Due to people wanting to escape high-density living, more people continue to shift to Hunter to live, but they are also relocating their small businesses here too,” Warren said.

“The ongoing migration away from the major population hubs in deriving the robust demand for industrial units and other commercial properties.”

The impact of shares and interest rates

 Warren said the combination of the correction in the residential market and volatile share markets have also contributed to more investor demand for commercial stock. “We often see that when interest rates rise, and the other asset classes take a breather, investors refocus on commercial assets,” he said. 

 Across the Newcastle region, current yields are averaging 5.3% for retail property, rising to 5.5% for office assets and 6.0% for industrial space.

Warren expects these yields to rise as we head towards the end of 2022. According to Warren, the retail market in Newcastle has seen a moderate uptick in market activity since the lifting of lockdowns in late 2021. However he expects the industrial market to continue to lift substantially, given the lack of industrial land in the Newcastle area and ongoing investor demand.

Warren expects only a slight change in the office market as we progress through the year.

 For all your commercial property sales and leasing needs in the Hunter, contact Raine & Horne Commercial Newcastle on 02 4949 2300.