Raine & Horne Commercial

NSW - Newcastle Across the Newcastle region, current yields are averaging 6.0-7.0% for retail property, rising to 6.5-7.5% for office assets and 7.0-9.0% on industrial space. Steve Dick of Commercial Newcastle expects industrial yields to hold steady though they could rise if coal prices change. Yields on office space in the Newcastle CBD look likely to rise as the state government moves out of 15,000 square metres of rental space and into a new premises in Stewart Avenue, the largest office building in Newcastle. At present, office property has vacancy rates of just 4.9%, rising to 7.7% for industrial space. As the gateway to the Hunter region, Newcastle will benefit from improved road infrastructure along sections of the M1 as well as the NorthConnex tunnel in Sydney’s north. The timing of these infrastructure improvements is crucial as people are moving from Sydney to Newcastle in record numbers in the wake of COVID-19. While this migration is already putting pressure on residential stock, it will create additional businesses opportunities locally and ultimately more commercial property demand. In the shorter term, as with many other regions, low interest rates are making it more attractive for Newcastle owner operators to invest in their premises rather than rent. The key challenge at present is lack of available stock. 19 - Steve Dick steve@rhplus.com.au