Inner West commercial property proving a spring-board to success
36 Shepherd Street, Marrickville
Marrickville NSW (22 September, 2016) – The Spring 2016 issue of Raine & Horne Commercial Insights has found a trifecta of factors – comprising low interest rates, a supportive Federal government and lacklustre returns on many other investment classes – is driving significant interest in commercial property assets in the Inner West.
“Today’s low interest rates make now the ideal time to review commercial portfolios and add new assets,” said Angus Raine, Executive Chairman, Raine & Horne Commercial.
“Small business owners are well-placed to take advantage of the current favourable market to step into their own premises, or upgrade business premises, and strengthen their enterprise’s asset base.”
Located just six kilometres from the Sydney CBD, Marrickville is part of a rapidly evolving precinct attracting food providores, micro-breweries, bakeries, marketing agencies, coffee roasters, gyms and cafes, in addition to the district’s traditional industrial tenants.
High demand has seen industrial properties experience capital growth of 20% over the last 12 months, and while this has pushed yields down to 4-6% for both commercial and industrial properties, vacancy rates are tight.
Luke Smith Co-principal of Raine & Horne Commercial South Sydney says, “We’re seeing vacancies as low as 3-5% for industrial property and 5-8% for commercial premises”. The strength of demand means 80% of commercial properties are being sold under the hammer.
Underpinning the strength of the Inner West market, a number of interrelated factors are driving demand up and supply down.
“These include the region’s popularity as a long-term business destination, plus the rezoning of some industrial-dominated streets for residential purposes, which is contributing to the stock shortfall,” said Mr Smith.
Adding to the demand equation, cashed-up owners who sold industrial properties to residential developers are seeking to reinvest in commercial assets. In addition, compulsory acquisitions for the West Connex and the Sydney Metro extension are gobbling up commercial space, adding to the supply challenges.
As a guide to the health of the commercial market in the Inner West, a mixed use property at 36 Shepherd Street, Marrickville sold this week at auction for $1,760,000.00, which was above expectation.
Ten buyers attended the auction held on Monday 20 September after selling agent Nicholas Smith, Co-principal of Raine & Horne Commercial South Sydney, received in excess of 150 enquiries on the property.
The property consists of a combination of office and warehouse and is Zoned Business Park B7 which proved to be very popular due to its flexibility with potential live and work opportunities.
“The majority of enquiry came from owner occupiers,” said Mr Smith.
“The auction opened at $1,100,000, with bids fielded from 7 prospective purchasers’, and the property could have easily sold several times. There is just no stock in our region, and this is driving prices.”
The final result was a record price for the area. “We now have a list of buyers that missed out that are ready to buy similar types of property.”
The result caps a strong week for Raine & Horne Commercial South Sydney / Marrickville, with 5 out of 5 properties taken to auction selling. All properties attracted strong competition from buyers.
“The commercial property market seems to have taken over residential in terms of growth throughout the inner west,” said Mr Smith.
Other Raine & Horne Commercial South Sydney / Marrickville’s sales in the last week include:
- An industrial unit at 9/8 Burrows Road, St Peters sold at auction for $1,240,000. The property had a total building area of 300sqm.
- A residentially zoned warehouse at 147 Moorefields Road Roselands sold for $1,350,000
- A multi tenanted investment at 307-309 Homer Street, Earlwood sold for $3,815,000. The property contained 4 commercial tenancies and 4 residential tenancies and reflected a yield of 3%.
- A shop & residence at 449 Marrickville Road, Dulwich Hill sold for $1,650,000 and also reflected a yield of 3%
For more information on Australian commercial property markets, download a copy of Raine & Horne Commercial Insights.
About Raine & Horne Commercial
For more than 130 years, Raine & Horne has been assisting Australians achieve their property objectives. Since its launch in 1984, Raine & Horne Commercial has been an active market participant and is now the largest commercial property group in Australia, with over 35 offices servicing every state capital and key regional growth centres.
It is a full-service commercial real estate network with a broad suite of commercial, industrial and retail property services including sales, leasing, consulting, business broking, business recovery & insolvency, facilities and asset management services.
For further media information contact:
Luke Smith, Co-Principal, Raine & Horne Commercial Raine & Horne Commercial South Sydney/Marrickville on 0416 281 577
Andrew Harrington, National Communications Manager, Raine & Horne on 02 9258 5400