Ray White Commercial Robina - April 2022 Newsletter

Gold Coast

COMMERCIAL UPDATE

BY RAY WHITE COMMERCIAL ROBINA April 2022 Edition

SCOTT BURGESS Chief Executive Officer

Whilst all Commercial asset classes have had a stellar run throughout 2021, the industrial sector has been the clear stand out and continues to go from strength-to-strength. The level of activity during the second half of 2021 has continued into 2022 across all major Gold Coast industrial precincts and in some areas, owner occupier demand has reached a level that has not been seen before on the Gold Coast.

With capital city yields incredibly low, the Gold Coast has become a go to market for savvy investors who see strong interstate migration and increased infrastructure spending underpinning the area. The added bonus of an Olympic games coming to South East Queensland in 2032 is only adding to this confidence and all indications are that this trend will continue.

Whilst the Commercial investment market remains strong, investors are now being challenged by increasing owner-occupier demand. With owner-occupier and investor activity continuing to grow and interest rates tipped to stay at or near their current levels in the short to medium term, we see the commercial sector continuing its upward trajectory.

2021: A WRAP OF THE STANDOUT GOLD COAST COMMERCIAL MARKET The Gold Coast commercial market has had some mixed results over the past 24 months.

Prior to COVID-19 the trajectory was positive, demand levels were increasing, and occupancy was improving across most asset classes as population growth was poised to continue and infrastructure spending was up. Upon the pandemic’s onset, we saw all these positive results halt, the market remained in a holding pattern for most of 2020 as both occupiers and owners grappled with the unprecedented social and economic conditions impacting our way of life.

While activity did continue, most owners opted to hold until greater certainty came to the marketplace.

Queensland enjoyed limited lockdowns over the coming months due to strong border controls which resulted in an influx of interstate migration, aiding in growing residential values as well as demand for commercial space. New business starts were instrumental in the changing vacancy position for many assets while we saw more assets come to market as owners look to capitalise on the strong demand to invest in quality offerings. With location not a concern for many investors, local buyers and owner occupiers were soon in competition with interstate investors looking to secure an income producing asset in the sunshine (and COVID-19 free) state. The announcement of Brisbane securing the 2032 Olympics further fueling demand for assets across South East Queensland as many infrastructure improvements would be fast-tracked further benefiting the local property markets. This has all culminated into 2021 recording the highest sales volume on record, as buyers across the country and offshore all compete for assets setting new benchmarks in value and yield.

VANESSA RADER Head of Research

HISTORICAL SALES VOLUME AND TRANSACTION NUMBER GOLD

During 2021 through to 1 December, we have recorded 623 transactions totaling $2.42 billion, this represents a 79.79% increase on the full 2020 calendar year. By the conclusion of this year, we expect sales will further increase to over $3 billion, making this the busiest 12-month period for the Gold Coast commercial property market. Historically industrial sales do dominate investment activity, however several high value retail centre sales has resulted in close to 40% of all turnover being devoted to this asset type. Despite the uncertainties surrounding the retail market given COVID-19 and growth in online retailing, demand for bricks and mortar establishments remain high by both occupiers and investors including domestic trusts and funds. We have also seen Gold Coast office assets enjoy strong improvements in demand which is expected to reduce vacancies back to 2012 levels, as a result buyers amassed $550 million in sales this period. Industrial assets have accounted for just 20.04% of sales this year, while a number of larger institutional transactions have occurred, 201 of the 277 sales recorded were for assets in the sub $1.5 million price range, highlighting the local demand by both the owner occupier market and private investor.

We have also witnessed an uptick in interstate buyers converging on the Gold Coast, a combination of interstate migration fueling population gains, growth in business starts and affordability making this an attractive investment choice.

We continue to see demand high in emerging sectors including medical which has seen a 161% growth in turnover compared to last year. Hotel & Leisure transactions are also up, dominated by the vibrant pub sector.

The sub $5 million assets recorded over 550 of the 623 transactions (of which 75% was in the sub $1.5 million price range) highlighting the increased appetite by the smaller investor, private buyer and owner occupier given the weight of funds in the marketplace, low interest rates and stable returns. A number of high value transactions this year including the office asset at SO Cavill Avenue, Surfers Paradise for $113.5 million and a few shopping centres including Runaway Bay Shopping Village for $256 million has been instrumental in elevating the average price this year to $3.89 million after averaging $2.64 million the prior two years.

GOLD COAST COMMERCIAL YIELD RANGES 2H 2021

The huge appetite for commercial investment stock has resulted in both activity rising and yields compressing. Over the past 12 months we have seen average yields drop and ranges narrow as buyers activity compete for all stock on the market, many moving up the risk curve and the fear of missing out bringing emotion to the commercial property market we do not usually see. This chart identifies a trend which has been solidifying over the last year, with the average yield very similar across all asset types. While industrial assets have been the big winner during the COVID-19 era keeping occupancy up and yields down, assets such as retail and office which were more adversely affected by restrictions, lock downs and changing sentiments continue to result in similar yield profiles albeit within a broader range.

The industrial average however does remain the tightest at 6.07% (4.00% to 8.09% range), followed by retail which ranges broadly from the larger neighbourhood/sub regional centre through to strata strip shops keeping yields between 3.28% to 10.00% averaging 6.28%.

Office slightly ahead ranging from 3.87% for smaller strata offerings to 8.19% with an average of 6.72%.

Alternative investments keep within a narrow yield range, given the strong competition and quality lease covenants which they usually enjoy. Assets such as childcare, service stations, medical, fast food all hotly contested by both local and interstate investors vying for a long term, secure income stream. Yields for these investments average 5.75% within a small 4.50% to 6. 73% range.

It has been a busy 12-month period for the Gold Coast. Strong population gains, business growth, and the Olympics announcement, together with strict border restrictions which kept COVID-19 disruption limited (compared to the other eastern states), have put the spotlight on this location for investors. Commercial property sales have far exceeded prior years and with buyers converging on the coast from across Australia as well as overseas which has brought yields down to a new all-time low. The weight of funds in the marketplace suggest there will be a continued appetite for investment however the threat of interest rate rises may stifle some smaller first-time investors who have been speculating in the marketplace.

Availability of stock will remain an issue with owners opting to hold their assets given the low bond rates on offer, however as more secondary grade stock enters the market, buyers may become more considered slowing the FOMO trend and high turnover levels.

Demand will remain high for quality, well leased investment stock across all property types, those which offer secure, long term returns will continue to be highly sought after by both local and interstate buyers keeping yields low. We anxiously await what 2022 holds for the Gold Coast with borders reopening aiding the tourism sector and employment growth anticipated to be up bringing vibrancy back to this local economy.

To download the full Ray White Commercial Between the Lines research report on the Gold Coast market, visit our website: https://www.raywhitecommercial.com/research/

Selling Now Featured Properties This Month

Contact Agent

9 Trickett Street,

Surfers Paradise

An opportunity like no other exists to secure 5 lots, 2,344 sqm of commercial office including a 1 bedroom apartment in the heart of Surfers Paradise, across the road from the beach, on the Gold Coast.

• • • • • • • •

2,344 sqm approx.

Tenanted investment 5 year lease commencing 15th December 2019 Net income $420,065.76 approx.

5 lots on separate titles 6 kitchens 11 car parks 5 meeting rooms

Kelly Zeckovic

0418 790 201 kelly.zeckovic@raywhite.com

$8.8 million negotiable

2 Springfield Street, • • • •

MacGregor

High-profile Corner Positioning in the Heart of MacGregor DA Approved, 4,116m2* site Massive 109.4m Main Road Frontage Are You Ready For the Opportunity of the 2032 Brisbane Olympics ?!

Calling all investors who are looking for an exceptional location with retail, food, education, public transport, health, sport and recreation all rolled into one. Offering unbeaten exposure, unrivalled location and surrounded by an abundance of amenities, this centrally located high-profile investment opportunity is not to be missed.

This exciting block comprises of four tenanted adjoining lots (2,140m2; 582m2; 683m2; 711m2), providing you with a stable annual income whilst in preparation of construction.

Alex Wu

0425 117 828 alex.wu@raywhite.com

Bodey Reynoldson

0437 331 003 bodey.reynoldson@raywhite.com

Contact Agent

23/58 Riverwalk Avenue,

Robina

HQ Building is an impressive commercial and corporate environment within the Gold Coast’s fastest developing commercial hubs in Robina’s CBD. The six level building features premium grade office space plus 2 two basement levels of parking. It set the benchmark for strata office developments in the area.

• • • • • • •

52m² with an immaculate medically suited fit out Includes a spacious reception and consult rooms Recently commenced 2 year lease with a 2 year option to Pro Micro Annual net income of approximately $22,250 2 exclusive use basement car spaces HQ is just opposite the Robina Town Centre Cafe in the buildings foyer

Tony Stone

0409 792 650 tony.stone@raywhite.com

Expressions of Interest

16 Bienvenue Drive,

Currumbin Waters

This property is ideal for the large family as both levels have large open living areas with plenty of outdoor space for entertaining.

Perfect for you and your extended family or any investors would enjoy a quality investment located in a highly sought after area.

• • • • • •

Dual occupancy building with 2 separate living areas 4 bedrooms downstairs 3 bedroom residence upstairs 6 exclusive car parks Ducted air-conditioning Security system

James Stevenson

0498 121 165 james.stevenson@raywhite.com

Andrew Stevenson

0438 268 424 andrew.stevenson@raywhite.com

Expressions of Interest

12-14 Bienvenue Drive, Currumbin

Waters

Located opposite the local shopping centre and only minutes from the M1 this is the last infill site within the area. take advantage of this opportunity to develop on this level double block and if you need more area you can purchase the 2 story residence and office next door.

• Level 1,256m2 infill development site • Multiple development opportunities* • Immediate proximity to shopping, education facilities, open space recreation, community services and the M1 • Capitalise on the last infill development site in Currumbin Waters • Currumbin Waters has seen a compound growth rate of 11.8 for houses and 8.8% for units. (source corelogic)

James Stevenson

0498 121 165 james.stevenson@raywhite.com

Andrew Stevenson

0438 268 424 andrew.stevenson@raywhite.

$695,000 + GST

101/111 Lindfield Road,

Helensvale

Adjacent to Helensvale Plaza these units are on 1 title and have been carefully designed to comprise a 2 bedroom unit upstairs and either a 1 bedroom unit or office downstairs. Both can be commercial or residential or a combination. They are accessed via a podium level via stairs or lift from Helensvale Plaza or walkway from Lindfield Drive. Currently used as a 2 bedroom residential upstairs and commercial dental lab downstairs. Ideally suited to be owner occupied or can be tenanted to 1 or 2 different tenants. Located in a mixed use building with various businesses located in these unique properties.

• • • •

Potential for 2 x income streams 2 secure car spaces Courtyard downstairs and balcony upstairs plus resort facilities Including pool and BBQ area

Kelly Zeckovic

0418 790 201 kelly.zeckovic@raywhite.com

Expressions of Interest

4/55 Paradise Springs Avenue, Robina Purchase this 4 bedroom townhouse overlooking the Colonial Golf Course and receive significant income from managing the permanent (no holiday or short term) townhouse complex.

Currently the return on investment is a solid 8%* There is an upside on the income if you want to work a bit harder or if your looking to semi retire, then keep active around the resort and spend your spare time on your golf swing.

Located within walking distance to local restaurants, hairdressers, ancillary shopping, and a tavern.

This property is located only a minutes drive from Robina Town Centre with the beaches of Broadbeach and Miami only 15 minutes drive.

James Stevenson

0498 121 165 james.stevenson@raywhite.com

Wayne Holmes

0417 074 989 wayne.holmes@raywhite.com

203 Baileys Mountain Road, • • • • • • • •

Upper Coomera

Land Area 3.09* Hectares DA 83 residential 3 bedroom townhouses Designated Medium Density Residential Zone Located in rapidly growing Gold Coast corridor Positioned in an established development precinct with limited future supply Elevated corner site with easy access Convenient access to the M1, Coomera Westfield, Brisbane Train Line Located in close proximity to local shopping, schools and recreational facilities

James Stevenson

0498 121 165 james.stevenson@raywhite.com

Andrew Stevenson

0438 268 424 andrew.stevenson@raywhite.com

Leasing Now Featured Properties This Month

Contact Agent

1/18 Lake Street,

Varsity Lakes

70m² office with fit out and open plan area.

Ground level with large glass frontage for exposure and easy street access.

• • • • • •

70m² close to Bond Uni and cafés 2 car parking spaces - garaged Modern presentation Air Conditioned Kitchenette and bathroom Available in June

Kelly Zeckovic

0418 790 201 kelly.zeckovic@raywhite.com

Contact Agent

1/2 Waterfront Place,

Robina

• • • • • • •

232m² ground floor suite with quality features and presentation Highly visible streetfront tenancy offering profile and added signage options Includes a reception, boardroom and kitchenette as part of the open plan layout Large windows provide ample natural light throughout the tenancy 7 Allocated car spaces, plus numerous visitor parking options Plumbing infrastructure accessible in the floor for easier drainage or water connections Convenient surrounding amenity includes the Robina Town Centre, Robina Hospital and Cbus Super Stadium • Close to the Robina Train Station and easy access to the M1 • Call anytime to discuss

Tony Stone

0409 792 650 tony.stone@raywhite.com

Contact Agent

1/74 Upton Street, • • • • • • •

Bundall

Total Area 838m² Ground floor 491m² + mezzanine 347m² New Build (2019) all modern design features included Off Street Car Parking with easy trade delivery Air-conditioned throughout both levels Great Exposure to Upton Street with excellent signage opportunities Perfect for showroom and retail business

James Stevenson

0498 121 165 james.stevenson@raywhite.com

CHILDCARE CENTRES AS DEMAND RISES, IS NOW A GOOD TIME TO INVEST? While uncertainty across the Australian economy has been high after the onset of COVID-19 which locked down the country from March 2020, this did not slow a large portion of the investor market who were keen to continue to invest in commercial property. Some traditional asset classes such as office and retail were impacted by forced business closures, work from home mandates and rising unemployment.

We saw many buyers active in the marketplace positioning themselves after the Reserve Bank of Australia announced the unprecedented interest rate reductions. While there was an immediate halt to transactional activity during this time, as we entered the 2020/21 financial year, we saw both buyers and sellers more willing to transact despite these unprecedented times which has continued into 2021/22.

The rise of alternative investments was in full swing prior to this pandemic period, however the increased volume of funds looking for a home in the marketplace saw many buyers move up the risk curve and consider new opportunities.

Private investors most notably were actively pursuing assets such as service stations, data centres, medical centres and childcare due to them being “set and forget” assets with long term, secure income. Existing vacant stock absorbed a lot of this pressure in late 2020. However, currently there is a shortage in the supply of these smaller quality assets available for lease. In turn, this has driven up the net face rents for these assets in the Yatala Enterprise area.

For childcare, this demand continues nationwide despite the halt to population growth and the net migration losses of New South Wales and Victoria to the (COVI D-19) safe havens of Queensland and Western Australia.

Further fuelling interest in the childcare sector and stimulating not only investment but the ongoing development of assets was the Federal Government’s increases to the childcare subsidy as announced in this year’s budget. It’s expected that this will aid in further growing occupancy levels which had been impacted by the increased cost to families in recent years.

During 2021 to date we have recorded more than $220 million in transactions across Australian childcare centres as investors scrambled to successfully purchase, while fear of missing out (FOMO) is driving new lows in yields. With demand levels not dissipating as auction assets attract record bidder numbers and investors have greater certainty around occupancy and income stability after the subsidy announcement, interest now has moved from the private buyer to institutional and foreign groups all vying for a piece of this attractive asset class.

As a result, we have seen many investors move up the risk curve in the rush to secure one of these assets resulting in a narrowing in yield range and more significantly the average between metropolitan and regional properties.

With COVID-19 aiding in the movement of some of the population to regional parts of the country, this has spurred on confidence in assets in these less populated regions bringing investment yields close to on par to metropolitan sales in some states.

Things to watch when purchasing a childcare asset:

Speak to the local council to find out more about what may be proposed in your immediate area.

• Just like buying most commercial • Consider the location; in the rush to tenanted investments, you are secure an asset don’t forget the purchasing the property not he important fundamental of real estate, business, however in some cases this is location, location, location. Growing on offer together as a going concern, so areas will ensure longevity in your be aware of what you are purchasing. occupancy level which means stability of • Check the lease and licence agreements; income and potential capital growth. childcare assets are subject to stringent • Research; look to find out what other regulation regarding the number of similar sized and quality assets have sold children and occupancy standards. Be to get a greater idea of value and don’t certain what these are and whether the let FOMO take over. tenant is adhering to these agreements • The demand for childcare assets over as your income is often tied to them. the last year has been unprecedented • Outgoings will be paid by the tenant; with enquiry levels at a high and assets there are high standards and regulations transacting at low yields. While the bulk around the condition of childcare assets, of assets which have sold across this is the responsibility of the tenant Australia are within metropolitan areas, and should be built into the lease the appetite of buyers has grown to agreement. Similarly, other outgoing include regional assets which historsuch as council rates, land tax and ically were discounted reflecting the utilities should all be included in your increased risk. We continue to see this agreement. gap narrow as the weight of funds in the • Financing may be a little more difficult marketplace create greater competition compared to other assets, the lender my and push prices which will be further impose differing loan value ratio stimulated by the increase in Federal requirements (however childcare is far Government subsidy for childcare users. better than other alternative assets such as service stations) which could alter the amount you can borrow.

• Supply is key to consider in your local area; with limited population growth expected in the short term, new facilities opening in your area could impact the occupancy and viability for your operators.

Meet the Team Scott Burgess Chief Executive Officer 0413 124 007 scott.burgess@raywhite.com

Grant Burgess Principal 0413 678 076 grant.burgess@raywhite.com

David Rake General Manager 0402 985 262 david.rake@raywhite.com

Andrew Stevenson Projects Director 0438 268 424 andrew.stevenson@raywhite.com

James Stevenson Sales & Leasing 0498 121 165 james.stevenson@raywhite.com

Tony Stone Sales & Leasing 0409 792 650 tony.stone@raywhite.com

Kelly Zeckovic Sales & Leasing 0418 790 201 kelly.zeckovic@raywhite.com

Bodey Reynoldson Licensed Real Estate Agent 0437 331 003 bodey.reynoldson@raywhite.com

Danny Davidson Asset Manager 0410 486 341 danny.davidson@raywhite.com

Amy Betterridge Commercial Administrator 07 5593 2088 amy.betterridge@raywhite.com

Natalie McKenzie Asset Manager 0406 117 538 natalie.mckenzie@raywhite.com

Danica Roberts Contracts Administrator 07 5593 2088 contracts.robina@raywhite.com