Our sense of the overall commercial property mood is generally upbeat as we near the end of 2018. This is despite the great uncertainty surrounding us - locally and globally. There is far less discussion now about the demise of bricks and mortar retail, compared to years gone by. Retail property is seen as evolving not dying. Nevertheless this does not mean the end of the “Retail Apocalypse” headlines in 2019.
The impact of the Banking Royal Commission is going to continue to have unintended consequences. Debt is still available for investors and developers. At the moment, however, the current terms and conditions are not favourable enough to make many deals work.
Here are our seven friction points to watch:
- Wework and their imitators are arbitraging by leasing long-term office space and then marketing short-term “cool” co-working desks.
Market-leading landlords are responding by being more tenant centric and including more amenities with their commercial property offerings
- Fast Growing Online sales have an impact on retail property
Winners are understanding the big difference between the evolution of retail properties and the death of shopping spaces by e-commerce
- Well located Industrial Property in Strong Demand
Warehouses and factories close to their major markets have never been more sought after, especially in major cities
- Lack of National Energy Policy
If you are in a service industry and lease an office, you’re ok. Although electricity costs have escalated by 50% in recent years, electricity is on average only 10% of rental costs. If on the other hand energy is one of your business inputs – that’s another story.
- NBN Disappointments in both Strategy and Execution
As the internet becomes even more important for every business, NBN availability and performance will become an increasingly important requirement for commercial property
- Unintended Consequences of the Banking Royal Commission
The difficulty of arranging finance will not only have a direct impact on developers and investors, the current credit squeeze will suppress new business formation and thus impact on commercial property demand.
- Increasing share of the Commercial Property transaction costs by Advertising Portal Giants
Property Seekers spend up to 60% of their time on a commercial property page just looking at pictures. Choosing a new workspace is being decided more and more online. Advertising rates are being adjusted accordingly.
Commercial Property Guide’s innovation and independence have us well positioned for the year ahead. We are especially grateful to those Commercial Real Estate players, big and small, who have supported us during 2018.
We, at Commercial Property Guide, can’t wait for 2019.