Northern Beaches Market Update
Northern Beaches 179
Total commercial sales on the Northern Beaches for 2023
48 Winbourne Road, Brookvale
12 Boyle Street, Balgowlah
27 Orchard Road, Brookvale
19A Wesley Street, Elanora Heights
11 Boola Place, Cromer
61-63 Kenneth Road, Balgowlah
685 Pittwater Road, Dee Why
1/1 Minna Close, Belrose
26/32-34 Campbell Ave, Cromer
Lot B Lady Game Drive, Lindfield
92 Garden Street, Nth Narrabeen
613-615 Pittwater Road, Dee Why
Reasons to sell in the current market. After over a year of post-pandemic adjustment, the Australian commercial real estate market is experiencing signs of significant growth. The story is no different on the Northern Beaches, which is showing real signs of great improvement as Spring’s warmer weather and a feeling of new beginnings create an energetic buzz amongst buyers and investors alike. The uptick is a sign that Australia’s resilience during a tumultuous few years is beginning to bear fruit, as reflected by a relatively strong economy since the initial slumps around COVID-19. This, when combined with a projected population growth of 10% over the next five years, makes the region an increasingly attractive prospect for local and overseas investors alike. This is particularly the case on the highly sought-after Northern Beaches with an unmatched balance of work and lifestyle and a fast-growing industrial sector. As office assets, retail spaces, and industrial properties experience increasing demand and the build-to-rent (BTR) sector in Australia continues to gain momentum, we expect an exciting few months ahead. Now may just be the perfect time to capitalise on the favourable market conditions and the growing demand among commercial real estate investors.
Market Update Here at Upstate, the team has successfully transacted on 32 sales and 67 leases so far for 2023. We experienced mixed real estate conditions throughout the year, especially following the consistent 12 interest rate rises we have seen since May 2022. Statistics show that 50% of sale listings on Real Commercial on the Northern Beaches are sold through Upstate Commercial. Warehouse Summary Following on from the recent trend, the Northern Beaches warehouse market is still the most desired and strongest commercial asset class. Yields are still tight, shown in our Auction campaign for 48 Winbourne Road where two investors fought over this tenanted investment with the buyer eventually securing it for 2.74% Net. The industrial sector still boasts the most demand with lowest vacancy rates and lowest incoming supply to market yet we have found in recent months that both rents and sale prices stabilising with the more recent deals transacting. We are still finding that quality buildings with easy access and higher clearance, in good locations are still outperforming the secondary stock by far.
Office Summary We have found throughout the last year, a common theme from all enquiry of ‘a flight to quality’ meaning tenants and buyers are all looking for the highest quality of office space with warm shell fit outs. We believe that the presentation of your office space when looking for a buyer or tenant is key to strong enquiry levels, it is also important for employers when enticing their staff back into the workplace and away from the work from home model. We have seen the small suburban office markets, in particular Dee Why and Manly boasting the lowest vacancy rates on record but we are finding that the larger footprint office spaces are competing with CBD/City Fringe markets and still have a higher vacancy rate. We have seen that accessibility and public transport nearby is more important than ever at the moment. The sale pricing and expected returns/yields has been hard to gauge from the marketplace as there has been extremely low transactional activity on the Northern Beaches.
Retail Summary It has been another volatile year for the retail industry sector with evidence throughout recent months of consumer discretionary spending reducing due to higher interest rates and the cost of living rising. This can be seen Australia wide but as we know the Northern Beaches always holds a stronger position due to its demographic and tourism trends. We have experienced a softening in yields being achieved on the sales side and investors still have an appetite for blue chip tenanted assets. We have found that the leasing market is still turning over, ideally tenants are looking for more turn key properties to reduce their initial fit out costs. Some landlords have been holding out for better offers from quality tenants with experience as they want to see their asset leased out for a longer period. With retail sales tightening, it will be interesting to see which way the retail sector will move in the new FY.
Showroom Summary There has not been a whole lot of turnover in this specialised sector of the market due to recent vacancy rates being at all time lows on the Northern Beaches. We have found that there is still a lot of demand for well located showroom opportunities and the A grade tenants in these properties are thriving. There has been a new trend where Gyms and Health Uses used to be the flavour of the month for these asset types, however nowadays we are seeing furniture goods, trade supply and bulky goods retail options come over the top and push Gyms to the industrial sector.
Developments Summary An interesting sector watching the trends fluctuate during the last financial year – we have seen a lot more stock coming to market on the Northern Beaches primarily due to the increase in recent construction costs. We have discovered that due to these costs increasing and other unknown factors, it is proving harder to price certain projects. However we are still seeing the more experienced developers being very active and seeking opportunities in more premium locations. There is still a lack of housing options on the Northern Beaches and the affordability crisis is fuelling developers (local and out of area) to look at our region and that demand is not going away.
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Upstate 2023 stats 32
67
$18,000,000
Commercial sales
Commercial leased
Highest sale price
261
427
200,000+
Residential sales
Residential leased
Prospective buyers on our database
4,390
636
478,698
Number of enquiries
Number of inspections
Visitors to our website
6,649
7,700
82
Instagram following
Facebook following
Professionals on our team
Largest Commercial team on the Northern Beaches.
Sales and Leasing • Site Sales • Asset Management • Project Marketing “Terrific service over a 40-year period should demonstrate in spades what a great team this is at Upstate Commercial. On both the sales and management sides of the business, you will find a dedicated team of professionals who deliver the highest standards of customer service in the Northern Beaches.” Client Review - Nick
“This was only our first purchase through Upstate, but coming off the back of them already managing two of our commercial property investments. As with their leasing team, we found Upstate highly responsive and with an in-depth knowledge of the Northern Beaches market.” Client Review - Kyra
upstate.com.au