Raine & Horne Commercial

34 QLD - Mackay The Mackay region is seeing yields of 8.25-9.0% for industrial assets, rising to 9.0-10.0% for office space says Des Besanko of Commercial Mackay. Industrial property yields are expected to tighten, due to lack of available investment stock, but soft demandwill keep office yields at the same level. Low interest rates are encouraging business operators inMackay to buy their own premises, and this is chiefly occurring among industrial and commercial office/medical properties. Investors are seeking solid industrial assets in the area, with a strongweighted average lease expiry (WALE). Des notes that while Mackay/Moranbah have experienced little to no cases of COVID-19, government directives have seen cafes and tourismbusinesses forced into lockdown, making trading difficult in certain complexes. Industrial property has been little affected beyond businesses needing tomaintain social distancingmeasures. In terms of office space, a number of enterprises were forced to close their doors and transition towork fromhome arrangements though by Junemost office-based businesses were back at work. Some international and government departments still have their workers at home, and this is having a flowon effect on cafés and food retailers. Looking at propertymanagement, Des says the impact of the pandemic has been “mixed across the board, regardless of asset style”. He believes that only around 2.0%of commercial tenants havemade requests for rent relief, adding that “Some café/food outlets closed completely, dealingwith a 100% reduction in income, while others have adapted to takeaway only, albeit with a reduced level of income. Fast food tenants like Pizza Hut and Dominos saw increased turnover during this time.” Work is well underway on the Adani Carmichael Mine site with commercial markets in Central Queensland set to profit according to Des. The Carmichael coal mine is a ten million-tonne per annum thermal coal mine in the north of the Galilee Basin in Central Queensland, owned by Adani Mining. The open-pit mine has Queensland Government and Australian Government approval. Significantly, mining has cushionedmany parts of Queensland from the worst of the devastating economic impact of the COVID-19 lockdowns. In early 2020, more than $1 billion in contracts were in place for the construction of the Carmichael Mine and Rail project, while the construction of these projects will generate up to 1,500 direct jobs and support thousands of indirect jobs. Des says, “there are a lot of telecommunications companies inMackaywhowere already here or are now expanding their operations to support themining companies. Also, as soon as Adani startedmoving dirt, maintenance andmachinery support was required, andmuch of that came fromMackay.” Because of activities at Carmichael, the industrial sector was mostly unaffected by COVID-19, Des notes. “consequently, we don’t have a lot of industrial space to lease as some firms supporting the mines have decided they need to have sheds and the like in town rather than at themine.” - Des Besanko des.b@rhc.com.au