Opportunity on the commercial scene

Commercialscene

Businesses have had to adapt, pivot, even re-invent themselves over the past twelve months as a result of lockdowns, restrictions and economic changes.

Some businesses have felt the challenges more so than others – for example, our retail and hospitality industries were particularly hard hit – but there’s no doubting that all types of business (and people, for that matter) have been in some way impacted.

Through the challenges of it all, some businesses have thrived by taking the opportunity to change and adapt. The way in which workspaces and workplaces are being used has changed. Office design is predicted to change due to social distancing requirements, even when they are not so strict. More meeting rooms will come well-equipped with video functionality.

We might see more interest in suburban office spaces this year, with people preferring to stay closer to home but still in a work environment where they can interact and be part of a workplace culture.

One outcome may be an increasing demand for commercial property in regional areas. Boutique and ‘lifestyle’ businesses, such as craft brewing, coffee roasters and specialty bakeries are on the increase. Many have successfully adapted their business models to use their premises more effectively, even considering alternative locations to set up shop.

Investment in life sciences, which relates to the pharmaceuticals, biotech and medical technology industries, is tipped to grow this year. Other medical-related investments also likely to see continued interest from investors include hospitals and medical centres.

RE/MAX KRG and RE/MAX Commercial Alliances’ Garry Kelly of Canada Bay, in Sydney’s innerwest, has seen first-hand how businesses have adapted and embraced the need for change in an ever-evolving economic landscape and says businesses that were successful in growing through challenging times are set on a path to future growth and profitability.

I posed a few questions.

What is the make-up of your buyers?

The main buyers we are seeing at present are owner occupiers and investors who are looking for distressed stock.

Given that Australia has been minimally impacted by the pandemic compared to the rest of the world, can you see commercial real estate here being increasingly attractive to

overseas investors? Yes, as interest rates are so low. Return on investment is the driver for investors to park money.

Are you finding the way in which businesses use their space to be

changing? Yes, throughout COVID particularly, I saw a lot of businesses re-inventing themselves in order to grow and to pivot their businesses to remain competitive. For example, a local cafe added upmarket deli items and reduced seating, hence reducing labour costs and increasing their profits.

Have you found there to be a particular interest in certain types of property from certain tenants?

Most tenants want to be positioned in high traffic areas, particularly in strip shopping scenarios.

Have you found there has been a particular demand for certain types of commercial space, particularly

retail and office space? Over the last six months we have seen an increase in interest for shopfronts for food outlets. There has also been demand for office space as businesses adapt to new social distancing requirements. As some businesses grew, more office space was required.

Australian CBDs were hit hard during COVID-19 lockdowns, as office workers remained locked out of city workplaces and international students vacated university hubs. What do you think might make CBDs

more attractive to businesses? The major incentive, and possibly the only tool they have to work with, is attractive terms and rentals.

And as a final word, Garry believes the ongoing low interest rates and greater ease of borrowing will be favourable to investors across both commercial and residential markets in 2021.