IN THE KNOW 2019 Q1 COMMERCIAL PROPERTY WRAP UP
PINE RIVERS
MORETON BAY
SUNSHINE COAST
Level 1, 104 Gympie Road Strathpine, QLD 4500
3/125 Morayfield Road Morayfield QLD 4506
1/172 Brisbane Road Mooloolaba QLD 4557
T 1300 255 075 F 1300 778 887
T 1300 255 075 F 1300 778 887
T 1300 255 075 F 1300 778 887
ONE TEAM - THREE LOCATIONS
1
Welcome Welcome to the 2019 Q1 wrap up of commercial property activity across the Northern Corridor. The purpose of this report is to provide you with real time feedback from tenants, buyers, financiers and valuers as well as detailed analysis of the trends that have, and will continue to impact your property. Aura Business Park showcases that growth areas will be around employment hubs with committed new infrastructure and supported by lifestyle amenities. Northern Corridors Group's head of research has provided yet additional insights that identify opportunities and continuing trends. We are committed to being the commercial property experts for Queensland’s Northern Corridor and invest heavily in training, the latest technology and the highest caliber team. These resources enable us to continue providing you with the knowledge, resources and support to ensure your next property decision is made from an informed position of strength.
MICHAEL SHADFORTH COMMERCIAL PRINCIPAL
CHRIS MASSIE
COMMERCIAL PRINCIPAL
Contents ONE TEAM THREE LOCATIONS MAP
03
NORTHERN CORRIDOR SUMMARY
04
NORTHERN SUNSHINE COAST INDUSTRIAL 05
2
MORETON BAY & NORTH BRISBANE KEY INDICATORS 11 NORTH LAKES
12
REDCLIFFE PENINSULAR
13
SUNSHINE COAST KEY INDICATORS
06
CORPORATE PARK ESTATE
SOUTHERN SUNSHINE COAST
07
CENTRAL MORETON BAY
16
SUNSHINE COAST OFFICE
08
MORAYFIELD & CABOOLTURE CBD
17
SUNSHINE COAST RETAIL
09
BRENDALE
18
CENTRAL SUNSHINE COAST
10
NORTH BRISBANE
20
14-15
Cooran Pomona Tewantin
WHAT’S YOUR
Noosa Heads Sunshine Beach
Cooroy
NEXT MOVE?
Eumundi
Peregian Beach
North Arm
Coolum Beach
Ninderry Kenilworth
Marcoola Bli Bli
Mapleton
Maroochydore
Montville
Buderim
Palmwoods
Witta
Eudlo
Mooloolaba Warana
Sippy Downs
Conondale Maleny Mooloolah
Currimundi
Landsborough Peachester
Booroobin Bellthorpe
ONE TEAM 3 LOCATIONS SUNSHINE COAST Level 1 172 BRISBANE ROAD Mooloolaba, QLD 4557 +61 1300 25 50 75
Cedarton Glass House Mountains
Stanmore
Stony Creek
North Bribie Island
Woodford Neurum D’Aguilar Bracalba Mount Delaney Delaneys Creek Wamaran Basin Mount Mee
Wamuran Basin
Campbells Pocket
Mount Pleasant
Elimbah
Bellmere
Banksia Beach
Caboolture South
Beachmere
Woorim Sandstone point Bongaree
Morayfield
Burpengary East
Burpengary Deception Bay Scarborough
Rush Creek Dayboro
North Lakes
Whiteside
Samsonvale Kobble Creek Cashmere Mount Samson Mount Glorious
Mount Nebo
Toorbul
Caboolture
Narangba
Yugar
Donnybrook
Ningi
Moorina
King Scrub
Laceys Creek
PINE RIVERS Level 1 104 Gympie Road Strathpine, QLD 4500 +61 1300 255 075
Welsby
Moodlu
Rocksberg
MORETON BAY Unit 3 125 Morayfield Road Morayfield, QLD 4506 +61 1300 25 50 75
Caloundra
Kallangur Petrie Lawnton
Newport Redcliffe
Clontarf
Strathpine
Brendale
Bald Hills
Eatons Hill
Samford Valley
Carseldine Albany Creek Aspley
Banyo Chermside Arana Hills Nunda Camp Mountain Mitchelton
Wights Mountain
3
COMMERCIAL
$
PROPERTY
$ $
Our predictions: • An increase in demand from tenants, as finance becomes more difficult for owner-occupiers • A trend towards Auctions for investment property sales due to increasing buyer demand • Strata investment sales to drive the next wave of speculative industrial unit developments • Ongoing infrastructure investment to be the scaffolding that ensures ongoing Northern Corridor business growth
$
$ $
FINANCE BECOMING A SQUEEZE
INDUSTRIAL SUPPLY ISSUES
Information coming out of the Royal Inquiry through media channels has been mixed, but we can confirm from the “coal face” that securing funding in 2019 is proving considerably more difficult than 2018. Compliance requirements, LVR’s and processing time have all noticeably increased, with finance extension requests becoming the new norm.
Lack of quality available industrial stock continues to be an issue across the whole Northern Corridor. The demand is reflected in our enquiry tracking statistics for the first quarter of 2019, where industrial requirements accounted for over 70% of our enquiry, 50% of our completed transactions, but only 26% of our available stock.
This is particularly evident in the owner occupier market, where increasing equity requirements are impacting buyers’ capacity. Based on feedback from key finance advisors at our recent Ray White Elite conference, we can expect these tightened criteria to remain at least through the end of 2020.
Some relief is on the horizon for the southern end of the Sunshine Coast, with new product under construction in Aura, but the outlook is less positive for the southern areas. Tighter development lending criteria and increasing construction costs will further impact developers’ capacity to speculatively develop new product, but those who do should be handsomely rewarded in the medium term.
INVESTOR POOL RUNS DEEP
LOGISTICS OPERATORS ON THE MOVE
One sector of the market we expect to remain unaffected by the credit squeeze is the investor market. Those looking to find a return on their money may have their capacity to borrow reduced by tighter LVRs, but this simply results in a shift in down the rung of the property value they can pursue. Unlike owner-occupiers, investors are not restricted by geographical or functional constraints. They are free to adjust their parameters of type and location to meet the limitations imposed on them by financiers.
The increase in activity among transport and logistics operators we predicted last quarter has continued to ramp up across the Northern Corridor. Companies such as Toll and Mainfreight have been sourcing large footprints for regional distribution hubs in preparation for the growing population and changing habits of online consumers. The flow on is already being felt, with the expansion of ancillary businesses such as diesel mechanics and local couriers a noticeable trend.
Ongoing stock market volatility and rumours of potential interest rate cuts ensures the pool of investors looking for security of return will remain deep. The lack of available properties will be the story of 2019 and competition for those that come to market will be fierce.
4
Transport costs have long been a barrier to manufacturing operations moving north from the more traditional Brisbane industrial hubs. Increasing competition among locally based logistics operators may help remove this barrier and allow manufacturers to benefit from the cheaper land rates and employee access offered by the Northern Corridor
SUNSHINE COAST
Director Sunshine Coast
MICHAEL SHADFORTH CLOSER INSPECTION OF THE KEY FACTORS DRIVING THIS LATEST PERIOD OF SUSTAINED GROWTH SHOW THAT THE OPTIMISM IS WELL FOUNDED
Infrastructure spend continues to be a major driver of commercial activity across the Norther Corridor. Our team has been working closely to combine high level research with agent feedback from the front line to explore just how significant these projects are for business and the results have been very interesting.
Business confidence off the back of several solid years is seeing the absorption of office space improving. Minimal built form industrial stock has resulted in businesses turning to vacant land to design and construct their facilities to meet demand. Neighbourhood shopping centre vacancies across the Sunshine Coast in particular are at record lows, bucking the trend of softening retail across the country. Assuming no major world events, all lead indicators have us predicting a relatively stable and prosperous two years across the Northern Corridor. The crystal ball starts to get foggy after 2020, when major infrastructure projects are scheduled to be complete. It will be at this time that the strength of the market will be dictated by the success of our local and state governments to attract the major businesses that can benefit from this new infrastructure.
SUNSHINE COAST KEY INDICATORS SA LE S
LE A S I N G NUMBER
14
NUMBER
15
ANNUAL RENT
$563,818.04
SALES VALUE
$9,180,360
Ray White Commercial Q1 2019 Leases Type Industrial 44%
Ray White Commercial Q1 2019 Sales Type Retail 45%
Land 13%
Retail 27%
Industrial 47%
Retail 11%
Office 13%
5
Sunshine Coast
SPOTLIGHT ON NO RT H ER N S U NS HI NE COAS T NORTHERN CORRIDOR GROUP
THIS MONTH’S FEATURE ARTICLE WRITER IS AGENT JULIE RYAN OF RAY WHITE COMMERCIAL NORTHERN CORRIDOR GROUP
YOUR NORTHERN SUNSHINE COAST INDUSTRIAL PROPERTY UPDATE The upward trajectory has continued across the northern Sunshine Coast industrial market, as greater region construction growth is amplified by the existing stock shortage across most sectors.
We predict a generally positive pattern for this sector, though it will not be immune to the tightening lending criteria we expect to be in place until at least the end of 2020. This will impact owner-occupiers’ capacity to purchase, but should be offset by an uplift in leasing activity that will feed the tenanted-investor appetite. Yields should remain strong, with plenty of passive and SMSF investor money still looking for a home outside of volatile stock and insignificant fixed term rates. Lease renewal time remains the best time to for owners to offload properties they do not intend to keep in the long term.
The Noosa industrial market maintains its “small but mighty” status, with sale rates being achieved in the $2,500-$3,000+m2 range. Existing stock of both lease and sale product remains extremely tight and limited land in the immediate area provides few options for easing. Convenience and access to customers is what drives these premium prices, as service industry and semi retail businesses push the boundaries of permitted use to maintain their higher profile presence. In spite of its current robust status, history tells us owners in this Noosa precinct should be cautious. New land releases in Yandina and Coolum have quickly sold out at rates that make speculative construction attractive to developer/builders. Based on our recent feasibilities in the Aura precinct, it is likely that the land rates of $170-$200m2 could result in finished product coming to market in the range of $120-130m2 for lease and sub-$2,000m2 for sale. This new product, combined with a tightening of the financial sector, could see Noosa tenants starting to reassess the value of their current premium locations come lease renewal time. The enquiry we are seeing across this northern sector is weighted on both ends of the spectrum. Construction activity across the coast, combined with smaller residential lot sizes, is forcing many trade businesses to take on a “man shed” style warehouse to capitalise on the opportunities. This will benefit the Coolum and Yandina precincts that offer easy access to the highway. On the larger end, we are seeing transport and manufacturing interest from those looking to capitalise on the cheaper land prices and larger lots, while avoiding the growing congestion issues of some of the traditional hubs.
Borrow
FOR LEASE - NEW PROPERTIES LAST QUARTER Size
Median Size
Quantity
<200
112
19
200-500
460
>500
535
THIS QUARTER Annual Rent/m
Size
Median Size
$170
<200
139
22
$210
6
$132
200-500
227
5
$127
8
$99
>500
918
7
$100
2
Quantity
Annual Rent/m2
FOR SALE - NEW PROPERTIES LAST QUARTER
6
Size
Median Size
<200
130
200-500 >500
Quantity
THIS QUARTER Sale Rate/m2
Size
Median Size
Quantity
Sale Rate/m2
19
$2,314
<200
128
21
$2,654
382
10
$2,274
200-500
266
5
$1,522
1270
8
$1,664
>500
1000
9
$1,448
Sunshine Coast
SPOTLIGHT ON S O U T H ERN S U NS HI NE COAS T NORTHERN CORRIDOR GROUP
YOUR SOUTHERN AREA UPDATE The Southern Sunshine Coast continues to attract the majority of activity across the region, primarily due to the greater scope of options to accommodate businesses and developers of both heavy and light requirements. As identified in our recent Central Sunshine Coast report, the lack of available stock in the more traditional industrial precincts of the Coast are forcing established businesses south to address the growing pains caused by continued market growth across most sectors.
THIS MONTHâ&#x20AC;&#x2122;S FEATURE ARTICLE WRITER IS AGENT MICHAEL SHADFORTH OF RAY WHITE COMMERCIAL NORTHERN CORRIDOR GROUP
We have noted a slight increase in days on market for Caloundra West area already and will be interested to see if this is a quarterly glitch or a sign of a bigger trend of businesses waiting to see how Aura takes shape before committing.
Land sales to date have 25 of the 30 lots in stage 1 under contract and 18 of 33 lots in stage 2 committed. The shifting demographic continues to be driving activity south. 50% of the 80,000+ new residents expected to move to the Coast by 2026 will be located within the primary Aura catchment area. The precedent for this kind of rapid expansion has been witnessed by our team in North Lakes over the last decade, where industries from home furnishings and appliances to recreation and technology all benefited.
Larger operators and higher impact industry requirements are still driving activity in the Sunshine Coast Industrial Park, with a steady flow of stock expected to be produced across most size ranges throughout 2019. The upgrade of the Bruce Highway interchange is impacting accessibility in the short term, which has been compounded by robust growth in tourism numbers across the Coast.
Aura draws a new demographic to the Coast, with young families taking the place of the traditional retiree market. One industry proven to benefit from this shift is automotive trades and services, due to the increase in used car and multi-vehicle homes. One business has already positioned itself to capitalise on this trend by rebranding as Auramotive Mechanical Solutions and securing a tenancy in one of the first complexes currently under construction.
Office and retail tenancy demand remains soft in spite of strong visitor spending and record tourism occupancy. The ongoing population growth make the eventual redevelopment of Bulcock Street and the surrounding Caloundra CBD areas into a vibrant hub an inevitability. While some key projects are already under way, it appears that the majority of owners/developers will look to see out the next cycle before breaking from their holding pattern.
Most of this activity is gravitating towards Stocklandâ&#x20AC;&#x2122;s Aura Business Park, where competitive land rates, simpler development approval process and active speculative developers are removing the barrier to entry for many businesses. The first buildings in stage 1 are now coming out of the ground, with off plan pre-commitments being signed up already.
SUNSHINE Coast
FOR LEASE - NEW INDUSTRIAL PROPERTIES LAST QUARTER Size
Quantity
THIS QUARTER Annual Rent/m
2
Size
Quantity
Annual Rent/m2
0-200
10
$126
0-200
12
$140
200-500
1
$140
200-500
2
$120
500+
3
$71
500+
2
$101
FOR SALE - NEW INDUSTRIAL PROPERTIES LAST QUARTER Size
Quantity
THIS QUARTER Annual Rent/m2
Size
Quantity
Annual Rent/m2
0-200
12
$2,154
0-200
11
$2,298
200-500
3
$2,153
200-500
4
$1,993
500+
1
EOI
500+
0
No New Listings 7
Sunshine Coast
SPOTLIGHT ON S U N S H I N E COA S T O F F I C E NORTHERN CORRIDOR GROUP
THIS MONTHâ&#x20AC;&#x2122;S FEATURE ARTICLE WRITER IS VANESSA RADER HEAD OF RESEARCH AT RAY WHITE CORPORATE
BETWEEN THE LINES
The future for the Sunshine Coast is bright, the recent SEQ Cities Deal securing this location as one for growth of a liveable, vibrant, economic viable city harnessing local business, knowledge and entrepreneurship. Population growth continues to be strong with the appeal of lifestyle and affordability now seeing greater interstate migrants come to the region after a strong few years of losses to the southern states. However, as housing stress becomes more apparent in these locations, the attraction of Sunshine Coast and its economic and business possibilities have been heightened for many young families and start-up businesses. Sunshine Coast Office Indicators - Net Supply (sqm) v Total Vacancy (%) 25,000
Sunshine Coast Office Indicators - Net Absorption (sqm) 14,000 12,000
20,000
10,000 8,000
15,000
6,000 10,000
4,000 2,000
5,000
Net Supply
-4,000
Ja n19
Ja n18
Ja n17
Ja n16
Ja n15
Ja n14
Ja n13
Ja n12
Ja n11
Ja n09
Ja n19
Ja n18
Ja n17
Ja n16
Ja n15
Ja n14
Ja n13
Ja n12
Ja n11
Ja n10
Ja n09
Ja n08
-5,000
-2,000
Ja n10
0
0
Source Property Council of Australia
Total Vacancy % (RHS)
The recent Property Council of Australiaâ&#x20AC;&#x2122;s Office market report highlights the growing demand for employment (office) space across the Sunshine Coast. Local jobs growth continues to be increasing, heavily influenced by the growing small business numbers all seeking accommodation. This increased business demand has benefited both the industrial and office markets in this area with a large uptake in investment activity. The office market however has gone through a period of rejuvenation over the past few years, the completion of new stock to this market over the past two years has provided much needed A grade accommodation to attract these small businesses. 2018 saw the completion of 21,716sqm of new space including both the new Youi and Budget Direct Headquarters, while 2017 additions including Kon-Tiki (16,000sqm) and 50 Wises Road (5,200sqm). This high level of uncommitted supply additions was destined
to increase vacancy levels to their current January 2019 rate of 21.8%. Despite this historic high vacancy factor, the net absorption recorded over these two years were 5,334sqm and 7,139sqm respectively; this level of take up akin to other much larger suburbans markets around Australia like St Kilda Road and Macquarie Park. This healthy ongoing improvement in occupied stock levels highlighting the appetite for this type of quality accommodation in this location. These results also show the minimal absorption of secondary grade assets which further emphasises the need for older style accommodation to investigate repurposing or repositioning their current offering. The flight to quality as well as business expansion has seen much of this vacant A grade stock absorbed in early 2019 with the likelihood of rapid vacancy reductions seen over the next 12 months further aided by the withdrawal of secondary assets.
FOR LEASE - NEW OFFICE PROPERTIES Size <200 200-500 >500
LAST QUARTER Median Size 85 326 805
Quantity 56 9 4
Annual Rent/m2 $335 $256 $303
Size <200 200-500 >500
THIS QUARTER Median Size 75 265 732
Quantity 77 13 5
Annual Rent/m2 $346 $262 $290
Quantity 11 8 1
Sale Price/m2 $4,300 $3,590 EOI
FOR SALE - NEW OFFICE PROPERTIES Size (m2) <200 200-500 >500 8
LAST QUARTER Median Size 120 240 805
Quantity 13 7 1
Sale Price/m2 $4,452 EOI $3,230
Size (m2) <200 200-500 >500
THIS QUARTER Median Size 87 305 629
Sunshine Coast
SPOTLIGHT ON CENTRAL S U N S H I N E C O A S T R E TA I L NORTHERN CORRIDOR GROUP
THIS MONTH’S FEATURE ARTICLE WRITER IS AGENT JULIE RYAN OF RAY WHITE COMMERCIAL NORTHERN CORRIDOR GROUP
RETAIL INVESTMENTS WHAT DOES 2019 HAVE IN STORE?
We believe 2019 will be a strong year for Retail Investments. While there are recognised negative forces at play, it is local factors which will accelerate the greatest improvements in this sector. To get the negatives out of the way first, let’s recognise that online shopping and other disrupters to traditional retailing have put pressure on most retailers. This pressure is likely to accelerate with the rise of artificial intelligence, autonomous vehicle delivery and the like. Additionally, the negative sentiment in property circles nationally may have some dampening effect on business and consumer confidence. So why are we so positive in our outlook? There are numerous reasons to believe the growth corridor from Brisbane’s north through to the Sunshine Coast will experience strong steady growth year on year. Specifically, we see:
1. Strong employment growth (up 9,000 to 160,000 in 2018 Sunshine Coast)
2. Net migration remains strong with 30-50 being the largest group to move to SEQ. These are likely to be productive people in the local economy. Additionally, there are significant numbers of under 14yo’s moving which will mean continued growth as they become of employable age.
3. Strong entrepreneurial growth. Since 2015 (to 2017), new business start-ups have represented 2,185, or up 7.72%(ABS). We eagerly await 2018 figures, we expect they will show further strong growth in this important indication of entrepreneurial confidence. 4. Sunshine Coast has been rated in the Top 7 “Intelligent Communities” in the world meaning that the area is highly likely to grow jobs of high value very quickly.
5. The submarine cable arriving soon is a major attraction to “smart businesses”and is set to attract exceptionally strong growth in IT focused businesses. This means new highly-paid jobs are likely to grow in the very near future.
6. The growth of the industrial the availability of “just in deliveries” to retailers; improves their profitability underlying strength.
7. SEQ city plan ensures strong investment at Federal, State and Local levels for years into the future.
sector has led to a strong increase in time this and
2019 Tenant Mix? What retail investors need to focus on now, is who are going to be the vibrant and successful tenants of the future? Julie Ryan, our resident Retail Investment Specialist would be delighted to share her insights into how to target the right tenants moving forward.
FOR LEASE - NEW RETAIL PROPERTIES LAST QUARTER Size
Quantity
THIS QUARTER Annual Rent/m
2
Size
Quantity
Annual Rent/m2
<200
65
$414
<200
57
$393
200-500
10
$162
200-500
5
$190
>500
1
$220
>500
0
N/A
FOR SALE - NEW RETAIL PROPERTIES LAST QUARTER Size
Quantity
THIS QUARTER Annual Rent/m2
Size
Quantity
Annual Rent/m2
<200
15
$4,652
<200
13
$6,818
200-500
9
$2,710
200-500
6
$4,345
>500
2
$6,841
>500
1
EOI 9
Sunshine Coast
SPOTLIGHT ON CENTRAL CENTRAL SUNSHINE COAST NORTHERN CORRIDOR GROUP
THIS MONTH’S FEATURE ARTICLE WRITER IS AGENT JORDAN HAYES OF RAY WHITE COMMERCIAL NORTHERN CORRIDOR GROUP
KUNDA PARK & FOREST GLEN We define Central Sunshine Coast as the traditional industry hubs of Kunda Park and Forest Glen. There has been little change in the macro elements of the market for this region since our last report, with limited functional stock remaining the main element impacting activity across Kunda Park and Forest Glen. Closer analysis of enquiry levels and transactions have provided us with some interesting observations that property owners in this precinct should find interesting. Firstly, we have reviewed enquiry sources across the Sunshine Coast and found that the lack of serviced industrial land in the immediate area has businesses looking slightly further afield to accommodate upcoming growth requirements. This is particularly true for Caloundra’s Aura estate and, to a lesser extent, Coolum, where we see Kunda Park businesses beginning to search. We can expect some shuffling of businesses out of this precinct over the coming year, but pent up demand from within should see any functional properties quickly filled. The second observation is that 100% of tenanted investments listed in this area have sold. Enquiry levels indicate buyer sentiment remains strong, especially among local buyers familiar with Kunda Park and its position as an industrial hub of the Sunshine Coast. Finance reforms and interest rate adjustments may take some of the steam out of the investor market as a whole later in the year, but there is no other reason why demand for tenanted properties in this precinct from private investors shouldn’t remain strong for those owners looking to sell in the first half of 2019.
5 4
FOR SALE (JULY - DEC) 10
4
4
5
4
SOLD (JULY - DEC)
LISTED
FOR LEASE (JULY - DEC)
>500m2
200-500m2
0-200m2
>500m2
200-500m2
0-200m2
>500m2
0-200m2
>500m2
2
3
200-500m2
3
200-500m2
0-200m2
3
LISTED
5
5
LEASED (JULY - DEC)
MORETON BAY & NORTH BRISBANE
Director Moreton Bay
CHRIS MASSIE THE LATEST PROJECTIONS THROUGH TO 2031 SEES BOTH MORETON BAY AND THE SUNSHINE COAST BRACED FOR ONE OF THE LARGEST POPULATION INFLUXES IN THE COUNTRY
If the first quarter of 2019 is any indication, the Northern Corridor remains well positioned to capitalise on the key sectors of the market currently performing well. But this growth will not be without its frustration. Finance is proving to be a significant hurdle and this is particularly true for owner occupiers.
Lending criteria is tightening and typical approval times are blowing out beyond 45 days as the number of “hoops” being imposed by financiers increases. Frustration is also coming in the form of stock shortages for functional industrial buildings across almost all suburbs. But as they say in golf “Every shot makes someone smile”. . . The result of these two issues has been an uplift in leasing demand and a willingness of tenants (all be it begrudgingly) to commit to off-plan leases for yet to be constructed buildings. Rumours of a further interest rate cut has investors scrambling to find a return on their money, providing a strengthening market for these newly constructed investments with or without tenants. While an extended Easter break and an election provide excuses for those without the true need for action to delay decisions, we are seeing enough demand across most sectors that any second quarter dip will quickly be corrected through the traditionally strong third quarter. .
MORETON BAY & NORTH BRISBANE KEY INDICATORS LE A S I N G
SA LE S
NUMBER
38
NUMBER
6
RENT PA
$1,197,910.91
VALUE
$7,408,000
Ray White Commercial Q1 2019 Leases Type Showroom 5% Industrial 47%
Other 3%
Ray White Commercial Q1 2019 Sales Type
Retail 32%
Office 57 %
Industrial 67%
Office 13%
11
Moreton Bay & North Brisbane
SPOTLIGHT ON NORTH LAKES
NORTHERN CORRIDOR GROUP
THIS MONTHâ&#x20AC;&#x2122;S FEATURE ARTICLE WRITER IS AGENT CHRIS MASSIE OF THE NORTHERN CORRIDOR GROUP
YOUR NORTH LAKES UPDATE Construction activity remained strong this quarter for North Lakes, as the commercial in-fill continues to expand north through the Business Park at a solid pace. Flinders Parade has been the focal point of most activity, driven by retail showroom and service industry businesses looking to capitalise on the seemingly unflappable micro-economy of this awardwinning master-planned community. The business confidence and resulting commercial activity remains rooted in the on going strength of the residential market, which has enjoyed a shift in demographic over recent times. The resident profile for many years had been predominantly young local professionals and families, however 2018 saw an increase in people relocating from Sydney or Melbourne for a more relaxed and affordable lifestyle, still within 30km of the Brisbane CBD. This is in line with our greater domestic migration statistics across the region that was touched on in the recent Sunshine Coast office report, highlighting affordability as a key driver. Despite continued strong demand, the median price for housing is reported as $489,000 and median rent is around $430 to $460 per week, which compares very favourably to Brisbane.
Town centre retail has performed well, in spite of the continuing increase in supply via mixed use residential developments. Medical interest remains strong, with developments such as Keymaxâ&#x20AC;&#x2122;s North Lakes Specialist Medical Centre setting the standard for A grade regional facilities. Our prediction is that this precinct will continue to outperform surrounding suburbs by a comfortable margin in terms of achievable rents, vacancy rates and investment yields. The proven catchment, continuing speculative construction pipeline and minimal competing stock will ensure robust short term performance. The longer term should be even better, as competition for the last remaining tenancies is compounded by a greater Northern Corridor stock shortage and unprecedented population projections. Watch for strata sales to set new benchmarks with a string of new leases currently under negotiation slated to hit the market closer to the end of the financial year.
VA C A N C I E S SIZE
12
LAST QUARTER
AV E R A G E R E N T
THIS QUARTER
SIZE
LAST QUARTER
THIS QUARTER
0-200m2
13
8
0-200m2
$193
$191
200-500m2
7
14
200-500m2
$182
$190
>500m2
4
7
>500m2
$216
$228
Moreton Bay & North Brisbane
SPOTLIGHT ON REDCLIFFE PENINSULAR NORTHERN CORRIDOR GROUP
THIS MONTH’S FEATURE ARTICLE WRITER IS AGENT ASHLEY REES OF THE NORTHERN CORRIDOR GROUP
YOUR REDCLIFFE PENINSULAR UPDATE The Peninsular market remains a complicated one to summarise in one sentence. The micro market sectors are each being impacted in significant ways, creating isolated geographical and sectional pockets of growth and stress in close proximity to each other. The industrial sector remains the stand-out performer of the region as the capped expansion of Clontarf Industrial Estate struggles to accommodate the growing pains of the businesses that reside within. We are beginning to see upward pressure on rents in what has traditionally been one of the cheaper estates on the north side. The absorption of speculative stock constructed through Redcliffe Gardens Drive and surrounding streets will further compound pressure on vacancy options for businesses looking to capitalise on the increasing residential density in the region. Recent proposed changes to the zoning of some key commercial developments in Rothwell, combined with the saturation of the North Lakes Town Centre market, has seen the tide start to shift back towards the peninsular for bulky goods businesses. We expect this to be compounded by the ramping up of lot delivery in Stockland’s Newport development and the maturation of North Lakes’ residential land sales. Watch for an increase in the presence of white goods and home furnishing outlets through this Rothwell stretch in particular. Office and retail markets through Redcliffe, Scarborough, Margate and Kippa-Ring are still struggling to attract quality businesses. Organic expansion of local business is creating some musical-chairs shuffling, but overall vacancy take-up is minimal. This is unlikely to change in the short term due to the lack of functional, large footprint options. However, those willing to invest in refurbishment close to key infrastructure should be rewarded. Our case study on the former Commonwealth Bank refurbishment is a good example of this. Overall, the long-term prospects for this market are exceptionally strong. If we remove the filter of historical socioeconomic stigma, we see a governmental administrative hub with significant recent light rail infrastructure spend and a strengthening demographic offering a seaside lifestyle less than 40 minutes commute from the third largest city CBD in Australia. It may be a stretch to compare this are to Sydney’s northern beaches, but many of the ingredients are the same and we expect that if local developers refuse to see the potential, our southern friends soon will.
VA C A N C I E S SIZE
LAST QUARTER
AV E R A G E R E N T
THIS QUARTER
SIZE
LAST QUARTER
THIS QUARTER
0-200m2
4
6
0-200m2
$150
$142
200-500m2
5
5
200-500m2
$128
$120
>500m2
8
3
>500m2
$100
$106 13
Moreton Bay & North Brisbane
SPOTLIGHT ON C O R P O R AT E PA R K E S TAT E NORTHERN CORRIDOR GROUP
YOUR CORPORATE PARK ESTATE UPDATE The Corporate Park estate has been as much defined by what hasn’t happened than what has over the last six months, with the lack of available stock meaning little can change. Our prediction last report was that the release of Corporate Park East nearby would begin providing some relief to the intense stock squeeze by the third quarter of 2019. However, the off-plan land sales to date are entirely owner occupier driven, meaning no speculative development of smaller strata units is on the cards at this stage.
THIS MONTH’S FEATURE ARTICLE WRITER IS AGENT AARON CANAVAN OF THE NORTHERN CORRIDOR GROUP
In summary, there is scope for some upward pressure on gross rents in this area, though increased outgoings costs mean not all of this growth will end up in owners’ pockets. Appetite for tenanted investment properties will remain strong, as low interest rates see investors hunting a return on their cash. Corporate Park East will continue to provide some relief for owner occupiers, but any developers willing to roll the dice on building functional industrial buildings for lease should see the odds in their favour for a positive outcome.
We believe there are a combination of factors that have impacted the ratio of developer/builder to owner-occupier activity. Firstly, the pentup owner-occupier demand due to the lack of existing stock cannot be overstated, with 82 requirements for stand-alone facilities currently on our books. There may be no better reflection of this appetite than the sale this week of one of the lots fronting Bribie Island Road at Peter Rash Court for $320m2 after eight years on the market! Secondly, the tightening of lending criteria has reduced the capacity of developers to speculatively build without the certainty of a tenant. This creates a chicken-and-egg dilemma that will lead to a positive outcome for anyone willing or able to produce stock. Thirdly, the Caboolture market is largely untested by the institutional developers, who are more comfortable maintaining their presence in the more established inner-city markets, regardless of the inflated land prices and increased competition. These are the companies with the capacity to develop in the new, more restrictive financial environment, but who do not yet have the appetite. We anticipate the maturation of North Lakes and the tightening of inner-city markets will eventually force them to look further afield, but the timing of this is unknown.
VA C A N C I E S SIZE
14
LAST QUARTER
AV E R A G E R E N T
THIS QUARTER
SIZE
LAST QUARTER
THIS QUARTER
0-200m2
3
8
0-200m2
134
139
200-500m2
8
6
200-500m2
112
120
>500m2
7
7
>500m2
108
110
Sunshine Coast
GENERAL INDUSTRY LAND PURPOSE BUILT LEASE HARDSTAND LEASE
Port of Brisbane
Brisbane CBD North Lakes
Brendale
North Harbour
Corporate Park
The opportunity Bruce HWY 3 Mins
Airport 25 Mins
You can now secure fully serviced General Industry land lots in Caboolture’s first estate release for over ten years. Corporate Park, at the Bribie Island Rd and Bruce Highway interchange, has long been the area’s preferred location for industrial tenants and owneroccupiers in Moreton Bay. The estate is now at capacity, so eyes are turning to the next release of Corporate Park East. Contact us today for a price list or to help design your ideal premises.
Port of Brisbane 30 Mins
Northern Corridor Group
CHRIS MASSIE chris.massie@raywhite.com 0412 490 840
ASHLEY REES ashley.rees@raywhite.com 0411 707 410
15
Moreton Bay & North Brisbane
SPOTLIGHT ON C E N T R A L M O R E T O N B AY NORTHERN CORRIDOR GROUP
THIS MONTHâ&#x20AC;&#x2122;S FEATURE ARTICLE WRITER IS AGENT ASHLEY REES OF THE NORTHERN CORRIDOR GROUP
YOUR INDUSTRIAL UPDATE This well-established industrial precinct fringing the Bruce Highway through Narangba, Deception Bay and Burpengary continues to come of age as one of the more functional logistics hubs of the Northern Corridor. There is probably no better example of the current appetite for industrial product on the north side than the government run Narangba Industrial Estate, where the last of the lots have just gone under contract after more than twenty years on the market. While price has never been a major sticking point for this estate, the extreme government compliance obligations for businesses wishing to buy and build have proven a major deterrent until the recent lack of alternatives forced their hand. Watch for some significant construction through this area over the next twelve months as these recent land transactions evolve into operating businesses. As shown by the figures below, this area is not immune to the stock shortages currently being experienced across the greater Northern Corridor. Motorway Business Park is likely to provide some relief through its flexible Mixed Industry & Business zoning, with construction of the next stage expected to commence in the second half of 2019. The lot sizes ranging from 2,000m2 will provide options for owner occupiers and larger tenant-driven developments. We hope to be proven wrong, but it is likely that increased construction costs, stagnated rentals and tighter lending criteria will restrict developers from producing speculative stock to meet the true current demands, which is primarily from small to medium enterprises.
In the medium term, the population growth projected through Caboolture West, Aura and residual infill through the region will ensure major business will be dragged further north to service what will be a powerhouse catchment of national significance. In the shorter term, ongoing congestion issues closer to the city and with the Sunshine Coast proving to be a lifestyle magnet for business owners, there is no reason why the shift of businesses out of the inner-north will not continue. This has been reflected in our analysis of enquiry sources across the last six months, with a significant increase in the percentage coming from established Brendale and inner north businesses. For investors, values for both vacant and tenanted existing stock through this region should continue to climb through ongoing tenant demand and as North Lakes sets new benchmarks. Tenants will come and go, so focus instead on well located, functional buildings with good truck access. Strata units through Business Drive and Kabi Circuit will continue to perform well and any buildings purchase under $2,000m2 should yield strong medium term capital growth, regardless of current tenancy status.
VA C A N C I E S SIZE
16
LAST QUARTER
AV E R A G E R E N T
THIS QUARTER
SIZE
LAST QUARTER
THIS QUARTER
0-200m2
0
1
0-200m2
$0
$174
200-500m2
7
6
200-500m2
$115
$121
>500m2
8
7
>500m2
$104
$114
Moreton Bay & North Brisbane
SPOTLIGHT ON MORAYFIELD & CABOOLTURE CBD NORTHERN CORRIDOR GROUP
THIS MONTH’S FEATURE ARTICLE WRITER IS AGENT BLAKE PRIMROSE OF THE NORTHERN CORRIDOR GROUP
YOUR CBD UPDATE The activity across the Caboolture/Morayfield retail and office market over the last quarter has been solid, without being spectacular. For the office market, the government funded professional services continues to drive the bulk of the requirements. These come with a very specific list of compliance requirements that some of the older facilities are not able to meet without significant retro-fit investment by owners. This investment can often prove lucrative, but requires an element of “build it and they will come” to ensure timelines can be met.
Strong population projections are an undeniable force that will ensure long term growth for property owners able to weather the storm of medium term vacancy concerns.
The exodus of the big 4 banks from King Street in recent years left a glut of office space with custom fit outs that suited very few tenants. This trend has been repeated across regional centres, as branches downsize due to online banking and centralisation or outsourcing of administration teams into larger hubs. The good news is our leasing team has now filled the last of this remaining space, with a State Government department committing to the whole of the former NAB office at 7 Morayfield Road.
Lo w er K ing St reet M e n u
Retail options along Morayfield Road remain quite limited, though minimal enquiry indicates there is not a great deal of supply/demand disparity. Even in this precinct, lease deals have been dominated by industrial and service industry users taking up secondary space, as opposed to more traditional high visibility retail. This is reflected in our leasing team’s Active Enquiry Register, which currently has 39 industrial requirements, vs 10 office and 10 retail.
Coffee
One positive indicator is the level of developer enquiry for on and offmarket sites with potential for convenience, fuel and fast food uses through King Street and Morayfield Road. The new Starbucks on Lower King Street is sure to do a booming trade with the battle-weary medical staff at the nearby hospital and a similar development is nearing completion on Bellemere Road that is perfectly located to capitalise on that expanding western catchment. Our predictions for this precinct: The geographical expansion limitations of Morayfield Road and the footprint constraints of the Caboolture CBD will pressure owners and tenants to continue to compromise function and fit out to maintain their presence in a rapidly expanding area. Lack of rental growth, increasing construction cost and the inability of government tenants to pre-commit to unbuilt facilities in the office market will restrict the ability of developers to produce new in-fill development. Convenience retail will remain strong in well located, high traffic areas with quality anchor tenants (fuel, supermarket) but secondary retail will continue to tread water.
VA C A N C I E S SIZE
AV E R A G E R E N T
THIS QUARTER
SIZE
THIS QUARTER
0-200m2
25
0-200m2
$338
200-500m2
5
200-500m2
$315
>500m2
3
>500m2
$294 17
SPOTLIGHT ON BSPOTLIGHT R E N D A LON E SPOTLIGHT ON NORTHERN CORRIDOR BBRREENNDDAALLEE
Moreton Bay & North Brisbane
GROUP
NORTHERN CORRIDOR GROUP NORTHERN CORRIDOR GROUP THIS MONTH’S FEATURE THIS IS MONTH’S ARTICLE WRITER AGENT FEATURE ARTICLE WRITER THIS MONTH’S FEATURE PETER LAURENT OF THE IS AGENT PETER ARTICLE WRITER ISLAURENT AGENT NORTHERN CORRIDOR GROUPOF THE NORTHERN PETER LAURENTCORRIDOR OF THE GROUP NORTHERN CORRIDOR GROUP
YOUR AREA UPDATE YOUR BRENDAL UPDATE YOUR AREA UPDATE Brendale continues to see strong demand in most industrial size brackets with achievable rates trending up slightly as the available stock diminishes. While historically Brendale has been the Geebung/Virginia industrial Brendale see strong demandofinthe most industrial brackets precincts continues lower costtocousin, the growth Moreton Baysize Region has with trending up slightlyand as the diminishes. madeachievable Brendale’srates proximity to Brisbane theavailable northernstock growth corridor While historically Brendale looking has been the Geebung/Virginia industrial a key feature for businesses to relocate or establish in the region. precincts lower cost cousin, the growth of the Moreton Bay Region has made Brisbaneland andensure the northern While Brendale’s large tractsproximity of futureto industrial ongoinggrowth supplycorridor for the aarea keyin feature for businesses looking to relocate establish in the region. the medium term, the current market isorexperiencing a growing stock shortage that is beginning to impact existing businesses. This is While large tracts ofin future industrial ensure ongoing supply for the particularly evident the 250m2 – land 1,250m2 range for leasing, where area in the medium term, the current market is experiencing a growing enquiry is significantly outstripping supply. The same is evident with larger stock shortage that is2,000m2 beginning to impactThis existing This is sale options between – 4,000m2. trend businesses. has been confirmed particularly in thesources 250m2 – 1,250m2 range leasing, where by analysis ofevident our enquiry through Narangba to for Caboolture, which enquiry is significantly outstripping supply. The same evident with larger shows an increase in the number of Brendale basedis businesses looking sale options 2,000m2 – 4,000m2. This trend has been confirmed north of the between Pine River. by analysis of our enquiry sources through Narangba to Caboolture, which shows ansecond increase in of the2018 number of Brendale businesses looking A strong half in terms of land based sales across the precinct north of thehope Pinefor River. gave some relief, but closer inspection of the intended designs of proposed developments shows a heavy gearing towards more showroom/ A strongindustry second half 2018 in terms looking of land sales acrossdirectly the precinct service usesoffor businesses to engage with gave some hope buttocloser inspection of the intended of consumers. This for willrelief, do little satisfy the true source of currentdesigns demand, proposed shows a heavy gearing towards more showroom/ which is developments primarily in the manufacturing, contractor and warehouse/ service industry uses for businesses looking to engage directly with distribution sectors. consumers. This will do little to satisfy the true source of current demand, which is primarily inincrease the manufacturing, and warehouse/ The result may see an in frustration contractor levels for businesses hunting distribution sectors. for a home, but owners of existing properties in Brendale are in a position to reap the benefits of this stock shortage. Owner occupier demand The result to may seethe an increase in frustration levelscriteria, for businesses hunting continues buck trend of tightening lending as even existing for a home, but owners of existing in Brendale are in a position stock with function issues begin toproperties garner attention. to reap the benefits of this stock shortage. Owner occupier demand continues buck demand the trendreflects of tightening lending criteria, as even existing While the to current pre-GFC levels, increasing operational stock with function begin to mean garnerthe attention. and outgoings costs issues for businesses realistic rent they can afford when factored against present day construction costs makes speculative While the current demand reflects pre-GFC levels, increasing operational and outgoings costs for businesses mean the realistic rent they can afford when factored COMMERCIAL against present REAL day construction costs & makes speculative BRENDALE ESTATE SUPPLY DEMAND INDUSTRIAL / WAREHOUSE - FOR LEASE
45% BRENDALE COMMERCIAL REAL ESTATE SUPPLY & DEMAND 40% INDUSTRIAL / WAREHOUSE -Listings FOR LEASE Leads 45% 35% 40% 30%
Listings
Leads
35% 25% 30% 20% 25% 15% 20% 10% 15% 5% 10% 0% 5%
100
0%
100
250
500
1000
250
500
1000
Property m2 18
2000
4000
4000+
Property m2
construction unviable for most developers. The only exception to this is the previously mentioned fringe sector between showroom and service industry businesses, where higher rents are achievable. construction unviable for most developers. The only exception to this is the previously fringe sector betweenstrong showroom service On the investormentioned front, demand remains extremely for anyand properties industry wherewith higher are achievable. with newbusinesses, leases. Owners rentrents reviews approaching should pay close attention to these negotiations as there will be no better time to sell On investor front, demand remains extremely strong for any have properties thanthe when the ink dries on a new lease, so long as key details been with new leases. Owners with rent reviews approaching should pay close addressed. attention to these negotiations as there will be no better time to sell than when the ink dries on a new lease, so long as key details have been addressed.
40%
BRENDALE COMMERCIAL REAL ESTATE SUPPLY & DEMAND INDUSTRIAL / WAREHOUSE - FOR SALE
BRENDALE COMMERCIAL REAL ESTATE SUPPLY & DEMAND INDUSTRIAL /Leads WAREHOUSE - FOR SALE 35% Listings 40% 30% 35% Listings Leads 25% 30% 20% 25% 15% 20% 10% 15% 5% 10% 0% 100 250 500 1000 2000 4000 4000+ 5% 2 Property m
2000
4000
4000+
0%
100
250
500
1000 Property m2
2000
4000
4000+
Moreton Bay & North Brisbane
SPOTLIGHT ON NORTH BRISBANE
NORTHERN CORRIDOR GROUP
THIS MONTH’S FEATURE ARTICLE WRITER IS AGENT BROCKE HAMBRECHT OF RAY WHITE COMMERCIAL NORTH COAST CENTRAL
YOUR NORTH BRISBANE For this report we have assessed the broader North Brisbane to Strathpine areas and worked with our agents to identify key trends across each market sector. Industrial supply of built form product continues to be extremely tight across the region. The balance between function and price remains the primary concern for businesses, with the increasing cost of business on all fronts causing the need for efficiencies to be maximised. The increase in outgoings in particular has caused a stall in effective net rental growth. In essence, the “per month” cost of occupying a property is increasing, but little of this money is ending up in the owner’s pocket. The impact of this is twofold. Firstly, the current average net rent is not enough for developers to justify speculative construction, in
NORTH BRISBANE COMMERCIAL REAL ESTATE SUPPLY & DEMAND INDUSTRIAL / WAREHOUSE - FOR LEASE
spite of the high demand for finished product. Secondly, the cost of holding vacant tenancies is placing increasing pressure on investors. The positive from this is that low interest rates and high construction costs are still driving a strong owner-occupier market for those looking to transition out of vacant investment properties at a profit. The next twelve months should prove productive for this area in general. Landlords and owner occupiers should be cautious of pushing the ‘approved use’ of existing industrial units too far in the direction of commercial or office, as non-compliance can prove expensive for all involved. Developers can expect strong take up of new stock, but should talk with our leasing team to ensure intended designs will meet the specific function requirements of businesses currently in the market.
NORTH BRISBANE COMMERCIAL REAL ESTATE SUPPLY & DEMAND INDUSTRIAL / WAREHOUSE - FOR SALE 45%
35%
Listings
30%
40%
Leads
Listings
Leads
35%
25%
30%
20%
25%
15%
20%
10%
15% 10%
5%
5%
0%
0% 100
250
500
1000
Property m2
2000
4000
4000+
100
250
500
1000
2000
4000
4000+
Property m2 19
OUR TEAM
NORTHERN CORRIDOR GROUP
SUNSHINE COAST
MORETON BAY
MICHAEL SHADFORTH COMMERCIAL PRINCIPAL 0488 981 076 michael.shadforth@raywhite.com
CHRIS MASSIE DIRECTOR 0412 490 840 chris.massie@raywhite.com
JULIE RYAN MAJOR ASSET SALES 0447 445 453 julie.ryan@raywhite.com
ASHLEY REES SENIOR PROPERTY ANALYST 0411 707 410 ashley.rees@raywhite.com
EMILY PENDLETON SALES & LEASING EXECUTIVE 0402 435 446 emily.pendleton@raywhite.com
WARWICK PETERS SENIOR BUSINESS BROKER 0412 234 231 warwick.peters@raywhite.com
JORDAN HAYES SALES & LEASING EXECUTIVE 0417 999 331 jordan.hayes@raywhite.com
AARON CANAVAN SALES & LEASING EXECUTIVE 0447 744 948 aaron.canavan@raywhite.com
BLAKE PRIMROSE SALES & LEASING EXECUTIVE 0423 555 043 blake.primrose@raywhite.com
PINE RIVERS PETER LAURENT SALES & LEASING EXECUTIVE 0429391675 peter.laurent@raywhite.com
TREVOR NELSON-JONES SALES & LEASING EXECUTIVE 0407 736 521 trevor.nelson-jones@raywhite.com
JUMA MARSTELLA SALES & LEASING EXECUTIVE 0450 360 321 juma.marstella@raywhite.com
BROCKE HAMBRECHT SALES & LEASING EXECUTIVE 0466 599 724 brocke.hambrecht@raywhite.com
raywhitecommercialnortherncorridorgroup.com.au
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