Raine & Horne Commercial

QLD - Brisbane North Trent Bruce of Commercial Brisbane North, says yields on retail property range between 5.0-6.5% depending on the quality of building, tenancy mix and WALE. Yields of circa 6.5-7% are being recorded for industrial assets, though this could tighten further based on lack of supply within the market and high demand from owner occupiers keen to take advantage of low interest rates. In the office market, there has been a limited number of transactions and yields of 7.0-7.5% are expected to hold steady in the short term. However, Trent believes this could rise as “the market is in a transitional phase with more employees working remotely creating lower demand for office tenancies”. Brisbane North is seeing a 10.0% vacancy rate among retail assets, 5.0% for industrial property and 15.0% for office space. Trent notes that despite COVID-19, “there are plenty of buyers and the supply of quality investment stock is tight, so vendors who list assets for sale are likely to enjoy a high level of interest.” As evidence of this, at its auction event in May, Commercial Brisbane sold seven from seven properties, followed by the sale of five from six listings at its August auction event. These clearance rates are especially remarkable as the sale campaigns were conducted in the thick of the pandemic. Trent notes, “the low interest rate environment, a lack of confidence with the volatility of shares and poor returns on cash are attracting investors and owner occupiers to commercial property.” Recent sales in the area include $2.85 million for a 1,500 square metre industrial office/warehouse in the highly desirable Banyo Industrial Precinct. An industrial property at 21 Lathe Street Virginia sold for $2.4 million, and a local investor paid $3.65 million for 70 Kedron Brook Road, Wilston – a freestanding building with a mix of strata-title retail, apartments and office, which attracted 60 plus inquiries. 30 - Trent Bruce tbruce@rhcommercial.com