Raine & Horne Commercial

NSW - North Sydney Nick Moloney of Commercial North Sydney, says yields in the area are currently averaging 5.0-6.0% for industrial and office property, rising to 6.0-7.0% for retail assets. According to Nick, “the industrial asset class was already gaining further attention and interest prior to COVID-19. It has, from this year, proved itself as an asset class that is highly resilient to dramatic change through the markets. The industries under the approved uses within the applicable zoning for industrial properties, are also consistent with a lot of the business that have thrived during the pandemic, making it an asset class that is anticipated to see further demand in coming years.” In the office market Nick explains, “larger institutional office assets may be more at risk of increasing yields because companies are reviewing their current lease requirements and downsizing their footprint resulting in increased vacancy. Smaller strata properties may be at less risk. With larger businesses moving into these smaller strata assets, there is possibility for their yields and capital values to be protected, and demand from investors has remained strong all through the pandemic.” There is also some positive news in the retail space. Jay Sheffield, Managing Director of Commercial North Sydney notes, “whilst the Lower North Shore has seen an increase in retail businesses closing down, over the past month we have seen experienced operators keen to secure sites to launch new brands. This has resulted in new leases being signed on some of the prime retail options that have not been offered for many years. Savvy operators are jumping on these prime spots to secure long lease terms with attractive lease rates.” As Nick explains, “current interest rates can, in some cases, make it cheaper to own rather than lease commercial space. This dynamic has a larger number of people who are currently renting commercial property, seriously considering the alternative option of purchasing their business premises.” 20 - Nick Moloney nick@rhcns.com.au