Commercial property activity in northern Brisbane has turned the corner after shouldering up to the challenges of March and April when restrictions and lockdowns forced markets to take a breather.
“Vendors have a strong appreciation for market conditions due to the ongoing commentary in the media, and consequently are more willing to accept reasonable offers,” said Trent Bruce Managing Director of the extraordinarily successful Raine & Horne Commercial Brisbane North. The Stafford-based business was recently announced as the Superbrand’s Top National Commercial Office based on the dollar value of its sales. Mr Bruce’s team also finished third in the Top National Commercial Office – Number of Sale category, while gun agent Lawrence Temple was named the national group’s Top National Commercial Salesperson - Sales $ Value.
Trent attributes the resilience of his business to the fact that it operates across all market segments. He adds “We generally transact in a more affordable range, and we don’t have to rely on sales decisions taken by corporate boards based in America, Singapore and other parts of the world,” Trent explains. “We deal with locally-based investors and owner-occupiers who can actually make business decisions.”
Lee Croucher, Sales Manager at Commercial Brisbane North chimes in, “There are plenty of buyers in the market and good stock is tight, so if you put up quality assets for sale in this market, you’ll get good interest.” To illustrate, at an auction event in May, the firm sold a remarkable seven from seven properties. The firm followed this success up by selling four from six at its August auction event.
On the buying front, Trent believes a lack of confidence in shares and the pitiful returns from cash are attracting investors to commercial property. “At the August auction, we sold a vacant possession property at 73 Depot Street, Banyo a day prior to the sale for $2.85 million,” he said. “This means the property has no tenant, and the investor identified the value in buying a well-located semi-industrial property.”
Moreover, Trent says the Banyo sale represents a broader trend. “We are seeing more investors prepared to take on a leasing risk if the property is well-located, and because there is such a shortage of fully leased investments available for sale.” Consequently, industrial yields are holding at around 6.5%, while medical assets are tighter at 5-5.5%.
Trent also suggests that record low interest rates are a fillip for commercial real estate. “The low interest rate environment is here for at least three years according to the Reserve Bank Governor. So, it’s a case of risk and reward. If you buy commercial real estate at a 3% interest rate give or take, and manage to get a 6% yield, you can’t really go wrong.”
On the leasing front, Lee Croucher says, “Because of COVID-19 business owners are re-evaluating space requirements, while people retrenched from long-term jobs looking to set up a new venture are seeking out manageable leases of under $30,000 annually.”
In conclusion, Trent recommends those vendors considering a sale to make a move now. “While there is pent up demand, it’s best to get in now to achieve a good result rather than waiting for 2021 when all the government stimulus such as JobKeeper expires.”
For all your commercial property sales and leasing enquiries in Brisbane North contact Raine & Horne Commercial Brisbane North on (07) 3352 8900.