Raine and Horne Commercial

INSIGHTS SPRING 2018 | 22 NSW | North Shore Nick Moloney of Commercial North Sydney says retail yields are currently 4.0-5.0%, industrial assets are delivering yields of 5.5-6.5%, and office property is recording yields of 5.5-7.5%. Nick anticipates price growth of 10.0-15.0% in owner occupied properties by year’s end but says investment stock may experience lower growth as it is capped by mortgage repayments. Nick explains, “In our current market we have experienced owner occupiers, who are willing to consider higher prices and pay premiums beyond what an investor will pay on a yield- driven basis. Even with the retraction of funding by major banks around SMSF investors, we regularly speak to buyers purchasing through a SMSF on advice from their accountants.” Nick anticipates office strata properties could trade for in excess of $10,000 per square metre for the first time in the North Sydney commercial market by the end of 2018. He explains, “We’re seeing the perfect storm for premium prices. We have a retraction of stock as a result of buildings being converted into mixed use developments, and an increased buyer pool as more parties buy investment properties through SMSFs. In addition, businesses are now considering buying property as it is more financially feasible than leasing.” Office property is Nick’s preferred option at present due to the large withdrawal of office space from the market, which has pushed vacancy rates down, reduced incentives and pushed rents upwards. Nick adds, “Tenants are focusing on long, secure leases and refurbished premises which will enhance their workplace and help to retain quality employees. Re-positioning a tired office suite in today’s market will achieve a great result within a short time-frame.” North Sydney “ Office strata properties could trade for in excess of $10,000 per square metre for the first time in the North Sydney commercial market by the end of 2018. ”