In recent years, investors have had a strong focus on the residential apartment market but with an ever-increasing influx of apartments and warnings of oversupply, we are now seeing a move towards commercial properties.
Unlike the residential market, commercial properties across Melbourne are in high demand, due to strong rental growth and rising employment opportunities - particularly in the CBD.
According to the latest Commercial Property Update by Deutsche Bank, Victoria’s economy is outperforming any other Australian state – the result of strong demand, employment opportunities and population growth. The bank predicts that commercial property incentives will fall to historic averages of 20-25% in 2018, driven by low vacancy rates and high demand.
This prediction is supported by other research, including a recent report by University of Queensland geographer, Thomas Sigler, highlighting a rise in corporate CBD headquarters between 2013 and 2016. Melbourne outshone other capital cities as a corporate location and was the only city to gain additional corporate HQ’s, driven by the information technology and healthcare sectors.
This rise in corporate headquarters, and the ease of access to the city from the outer suburbs thanks to Melbourne’s transport systems, has seen continued growth in white collar workers in Melbourne’s CBD and inner suburbs, which has in turn increased the demand for office supply.
With rent demand for CBD offices at an all-time high, it is now the perfect time to consider your commercial property options within Melbourne’s inner city.
Unsure what to keep an eye out for? Below, we take a look at the latest commercial trends and share our top tips to choosing a commercial investment heading into 2018:
Focus on food
Across the board, we are seeing growing demand from potential tenants on the proximity to food retailers. New developments are including space for food and beverage retailers within commercial office buildings right from the get go, with nearby food-and-beverage offerings influencing tenants’ decisions to purchase or lease. Take this into consideration when choosing your property location and ask yourself if these services will be available to increase tenant attraction.
Consider a strata office
This month, advisory firm Charter Keck Cramer released insights into the value of strata offices across Melbourne’s CBD, explaining that demand for these spaces has significantly increased in recent years.
Strata offices - subdivided floors or buildings that offer individual ownership or leases for companies - are ideal for smaller businesses or single operators, and comprise of less than six per cent of Melbourne’s total CBD office floor space.
Whilst currently a small section of the market, Charter Keck Cramer reports that strata offices have prospered in the current low interest rate environment, by offering an affordable price point to owner-occupiers and commercial property investors alike.
Due to the limited number of strata offices across Melbourne’s CBD, we believe investing in this type of niche space would provide a strong opportunity for potential investors, particularly as the demand for office space grows.
Creature comfort spaces
Conscious that employees are interested in more than just a job and wage, companies are increasingly on the hunt for spaces offering culture, wellness, comfort and a somewhat domestic flavour to entice potential new employees.
Take a careful look at the office space you are considering and ask yourself if it fits into this new trend. Does it have the ability to be transformed into a space that is both visually appealing, and encourages interaction and productivity?
Consult an expert
Beyond current trends, there are many other aspects to consider when investing in a commercial property. It is crucial to consult an expert with market knowledge and understanding, to assist in ensuring you are well informed on procedures to make your decision.
For more details or to speak with one of our consultants, please contact our head office: 03 9654 2311