CONFIDENCE has certainly grown in the Sunshine Coast commercial property market over the past 12 to 15 months.
After probably the toughest commercial market we have seen with the GFC, agents have had a strong year to follow on from an improved 2014.
CBRE Sunshine Coast director Brendan Robins said 2015 had seen cashed-up investors scrambling to secure a return on their money.
Ray White Commercial North Coast Central senior associate David C Smith pointed to the success rates of retail precincts at Mooloolaba, Kawana and Maroochydore.
“In the third quarter of 2014 the retail report showed a vacancy rate of 65 tenancies in the Mooloolaba strip,” Mr Smith said.
“The expansion of the Mirvac Kawana Shoppingtown is proving to be highly successful, together with the revitalisation of the Ocean St precinct in Maroochydore.
“For an area with no real core industry, there is a lot happening and the confidence levels in business and industry are a far cry from the low points of 2011-2012.”
![]( "PROGRESS: Property development in Maud St, Maroochydore, is a further sign of a strong <a href=")
commercial property market.” src=”https://media.apnarm.net.au/img/media/images/2016/01/01/SCN_02-01-2016_EGN_13_93%20Maud%20Street2_t460.jpg” alt=”PROGRESS: Property development in Maud St, Maroochydore, is a further sign of a strong commercial property market.” data-largeimg=”https://media.apnarm.net.au/img/media/images/2016/01/01/SCN_02-01-2016_EGN_13_93 Maud Street2_t620.jpg” />PROGRESS: Property development in Maud St, Maroochydore, is a further sign of a strong commercial property market.ContributedMr Robins said investors had been driving prices higher in the order of 10% to 15% and yields had sharpened across the board by 50-100 basis points to an average of 6.5% to 8% across all sectors.
“The leasing market, particularity retail has bounced back with improved business confidence and retail spending up across most sectors, strongest in food retail and the bulky goods sector.
“The commercial property market has three sectors – commercial office, retail and industrial.
“The Sunshine Coast office market in Kawana, Maroochydore and Mooloolaba now totals over 160,000 sq m of space.
“The vacancy factor over the past three years has fallen from around 15% to an estimated 10% to 11% and in the Birtinya region it is now as low as 4.5%.
“Generally, our office market is dominated by tenants in the range of 100-500 sq m and we have seen rents generally stable in the $300-$360 per sq m net range for the past five to seven years.
“Yields have improved with most sales in the range of 7.5% to 8%.
“Capital values for our A-grade stock generally range from $4000-$4500 per sq m.”
The Sunshine Coast retail market has experienced some strong growth in 2015.
BIG MOVERS: The new Officeworks building and Bunnings hardware in Dalton Dr, Maroochydore, led the charge in business property developments in 2015.Erle LeveyThis has been highlighted by the addition of the 15,000sq m Bunnings store in Maroochydore plus another 2200sqm of retail shops, also adjacent to a new 2150sq m Officeworks building.
“Over the next few years we will see several major retail projects commence, including the new Coles Sippy Downs, $350 million expansion of the Sunshine Plaza and also the continued development of the Kawana health precinct and adjoining retail projects,” Mr Robins said.
“Retail strata investments have been in high demand in 2015, attracting yields in the range of 6% to 7%.
“Some of these sales include Augello’s Mooloolaba for $2.75 million (6.95%), Gloria Jeans Mooloolaba for $1.82 million (6.81%) and BWS at Cotton Tree for $1.73 million (6.22%).”
Major retail centre sales in 2015 include Big Top Market Fresh and adjoining properties for $85 million, Bunnings Maroochydore for $42.1 million and Coles Nambour for circa $27 million.
In the industrial sector, many sales occurred over the course of 2015 including a range of investment sales and also an improved market for vacant land and new development. Selling prices for strata units in the size range of 200-500sq m were in the range of $1400 for sub-prime assets up to $1800 per sq m for the premium quality offerings.
Freehold single-occupant property typically achieved the higher rate per square metre.
Industrial investment property priced below $5 million was consistently in demand throughout 2015, with yields firming to an average 7.5% to 8% on prime assets with demand typically outstripping supply.
Industrial rents also firmed over the year, from an average $100 per sq m at the start to $110 per sq m by December for prime assets and from $90 per sq m to $100 per sq m for secondary stock.
The development land market has also seen strong interest from builders, developers, owner-occupiers and investors with tenants on pre-commitment. Town house and low density residential sites are highly sought after and generally sell for $40,000-$70,000 per unit site, dependent on development costs.
Looking forward to 2016, CBRE is optimistic on the back of some key observations and economic drivers for the region:
Major infrastructure projects include the Sunshine Coast University Public Hospital and Kawana health precinct, the announcement of Aura Caloundra South, the start of work on the SunCentral Principal Development Area in Maroochydore, planned sporting and cultural events for the Sunshine Coast and the announcement of more cruise ships arriving at Mooloolaba.
Mr Smith, who has been involved in industrial sales since the early 1980s, said it was wrong to believe there were a lot of properties to choose from, particularly in the small industrial stock in the 100-200sq m range and very little in the top-end 1000sq m and over.
The Corporate Centre in Norval Court seems to be gaining momentum, Headland Business Park was always in demand for leasing as it has office areas to accommodate most sizes and Kon Tiki in the Maroochydore CBD is pre-leasing and going well even though completion is a way off.
Another high exposure two-storey building is almost ready for fit-out in 93 Maud St, Maroochydore, and will be completed in March.
CBRE’s Brendan Robins expects 2016 will see the strong commercial market continue as investors pursue a return on their money and increased buyer appetite will see yields remain tight.
