The Deal Magazine | Commercial by Ray White AKG - September 2021 Edition

C ommercial

BY RAY WHITE AKG

THE DEAL MAGAZINE September 2021

CONTENTS 3

QUEENSLAND SURGING AHEAD WITH AVI KHAN

5

YATALA ENTERPRISE UPDATE WITH ANGUS PAGE

6

INDUSTRIAL SECTOR UPDATE WITH JAMIE DAVEY

7

LEASING NOW (FEATURED PROPERTIES)

9

SELLING NOW (FEATURED PROPERTIES)

11

JUST LEASED (FEATURED PROPERTIES)

13

JUST SOLD (FEATURED PROPERTIES)

15

CHILDCARE CENTRES - AS DEMAND RISES, IS NOW A GOOD TIME TO INVEST WITH RAY WHITE ECONOMICS TEAM

18

KNOW THE TEAM

CONTENTS

Queensland Surging Ahead with Avi Khan

The state is seeing the strongest population growth in Australia along with several economic indicators showing positive signs of prolonged growth. There was also the July announcement of the Olympic Games in 2032 which has created a lot of confidence in all sectors.

It’s left everyone asking questions about what the future holds and where will the growth be. Oftentimes we have our traditional lens on when it comes to real estate.

Whether it’s Commercial property or Residential property, there have always been norms that we have practiced and followed as investors and as property agents.

The traditional long term approach to investing is constantly being challenged. There’s no doubt that cashflow plays a crucial role in investing, especially with investors that are building a portfolio with several properties. Investors are approaching investing more like a business model now. For example, how can their portfolio sustain a loss for 5 years whilst waiting for capital growth to occur? This has led to investors widening their search from residential to commercial and to different asset types in commercial itself.

There is a convergence happening in the marketplace. As the residential market gains more momentum, yields are harder to come by, people are looking at commercial property in a different light.

3

With the Olympics on the horizon in 2032, investors will be looking at more investment options throughout Queensland.

The uniqueness of the 2032 Olympics is that it will be held over three areas: the Gold Coast, Brisbane and the Sunshine Coast.

The Queensland Government's KPMG report indicates that the Olympics will deliver more than $8 billion in economic benefits to the Queensland economy. The infrastructure spend and improvements to the public transport network is expected to create a jobs boom throughout the State. Along with major housing developments, this spend is likely to stimulate demand across the commercial and residential sectors.

The fundamentals are all strong and everyone is looking forward to a buoyant commercial market.

Avi Khan Director 0400 666 809 avi.khan@raywhite.com RAY WHITE AKG

4

Yatala Enterprise Update with Angus Page The Yatala Enterprise Area comprises the suburbs of Yatala, Stapylton and Ormeau. This region is located along the M1 Pacific Motorway between Brisbane and the Gold Coast, and over the past decade it has become home to many major companies including ALDI, Trade Tools and Caterpillar.

The commercial property market is now thriving after the economic turmoil caused by the COVID-19 pandemic early in 2020. The increase in the level of interstate migration to Queensland in 2021 has created new opportunities for small businesses and improved the local economy in Logan and on the Gold Coast. Private investors and owner-occupiers are seeking to take advantage of the current low interest rates which is resulting in a strong demand for smaller, high quality commercial assets. This has driven up capital values and compressed investment yields.

Similarly, the leasing market has also witnessed considerable improvement. The increased activity of new and existing small businesses looking to expand, contract or relocate, has resulted in an increase in the number of lease transactions.

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.

Angus Page Associate Director of Commercial

0433 627 769 angus.page@raywhite.com 5

INDUSTRIAL SECTOR

Moving Strong with No Signs of Slowing

with Jamie Davey

The introduction of lockdowns and border closures may have negatively impacted some sectors, but it has supercharged industrial and logistic property markets.

The recent surge in online retail activity has led to a demand for storage and distribution facilities throughout Australia.

During the first quarter of this year logistic assets throughout the Asia Pacific region increased 26% and continues to rise. Industrial property vacancy rates fell 23% during the second quarter of 2021, which has been the largest decline since 2010. This decrease in vacancy rates has led to a supply shortage, which in turn has led to an increase of rental rates for quality warehouse and distribution facilities throughout Australia.

It’s been said that the east coast of Australia has been the largest beneficiary of this industrial upswing with a recorded 2.2 million sqm of new facilities currently underway to cater for both the investor and leasing markets. If demand continues to increase, it will maintain a strong pressure on vacancies and if it manages to outpace building supply the rents will also continue to rise.

Jamie Davey Associate Director of Commercial 0400 763 772 jamie.davey@raywhite.com

6

LEASING NOW Featured Properties This Month OFFICE

3964 Pacific Highway LOGANHOLME From $190 per sqm PA + Outs + GST Building: 405sqm Land: 2,023sqm

Multiple Office Options with Great Parking and Highway Exposure Areas available from 98sqm* to 405sqm* Multiple fit-out options including partitioned offices, large meeting/ boardrooms and open plan Ground floor and first floor offices options Ducted air conditioning throughout

JAMIE DAVEY 0400 763 772 INDUSTRIAL

2/38 Eastern Service Rd STAPYLTON $75,360 pa + Outs + GST Building: 628sqm

628sqm* Facility With Drive Through Warehouse Capabilities Concrete tilt panel construction 628sqm* of premium office/warehouse 518sqm* of quality clearspan warehouse 110sqm* of A-grade office space

ANGUS PAGE 0433 627 769 7

LEASING NOW Featured Properties This Month OFFICE

139-143 Barbaralla Dr SPRINGWOOD From $320 per sqm + Outs + GST Building: 400-1,246sqm Land: 2,184sqm

One of Springwood's Best Office Offerings With Dedicated Parkting for 55 Vehicles JAMIE DAVEY Previously used as a call centre Office areas from 400sqm* to 1,246sqm* Open plan layout with ducted air conditioning throughout

0400 763 772 INDUSTRIAL

Lot 19 Warehouse Cct YATALA

CONTACT AGENT Building: 1,256sqm Land: 2,450sqm

Brand New A-Grade Facility in Prime Location New 1256sqm* facility on a 2450sqm* block 1019sqm* of clearspan warehouse 237sqm* of A-grade office space over two levels 8m minimum internal warehouse clearance

ANGUS PAGE 0433 627 769 8

SELLING NOW Featured Properties This Month RETAIL

Unit 1+2/104 Compton Rd

WOODRIDGE

$998,000 + GST Building: 432sqm Land: 254sqm

Newly Renovated Office/Retail Space On Main Road Total floor area of 432sqm* over 2 units with additional 80sqm* of mezzanine storage Ideally suited for retail showroom, professional offices or training facility Substantial entry showroom area Multiple partitioned offices over both levels with meeting/boardrooms

JAMIE DAVEY 0400 763 772 RETAIL

13/40 Browns Plains Rd BROWNS PLAINS

$790,000 Building: 145sqm

Well Located Office/Showroom With High Exposure 145sqm* of showroom/office space Large glass frontage Rear door access Ducted air-conditioning throughout

ANGUS PAGE 0433 627 769 9

SELLING NOW Featured Properties This Month RETAIL

17 River Road WATERFORD $1,050,000 Building: 350sqm Land: 1,993sqm

Display Yard in High Profile Location With Caretakers Residence Corner location offering great exposure and easy access 130sqm* Ground floor office area with amenities 130sqm* 3 Bedroom first floor caretakers residence 90sqm* 4 Bay workshop with provision to extend further Office area air conditioned throughout

JAMIE DAVEY 0400 763 772 INDUSTRIAL

1/38 Eastern Service Rd STAPYLTON

CONTACT AGENT Building: 690sqm

Well Presented Showroom Warehouse with Street Frontage 492m2 of quality clearspan warehouse 99m2 of contemporary ground floor office/showroom Additional 99m2 of partitioned mezzanine office Bonus 32m2 of mezzanine storage

ANGUS PAGE 0433 627 769 10

JUST LEASED Featured Properties This Month RETAIL

Shop 12/85-89 Coronation Road HILLCREST

Building/Land: 118sqm

LEASED BY JAMIE DAVEY! Ideally suited to medical, food, retail or office user Access to onsite grease traps and 3 phase power Open plan layout with full glass frontage Great natural light throughout Existing tenants include: chemist, doctor, dentist, bottle shop, chinese take away & bakery Busy local centre situated behind 7/11 service station Offers direct access to Middle Road and Coronation Rd 60 onsite car parks

JAMIE DAVEY Associate Director of Commercial 0400 763 772 jamie.davey@raywhite.com

11

JUST LEASED Featured Properties This Month INDUSTRIAL

1/48 Business Street YATALA

Building: 380sqm

LEASED BY ANGUS PAGE! Total floor area of 380m2 Large contemporary showroom Situated at the front of the complex Warehouse access via a single container height electric roller door Ample parking 3 phase power

ANGUS PAGE Associate Director of Commercial 0433 627 769 angus.page@raywhite.com

12

JUST SOLD Featured Properties This Month LAND

28 Sewell Road TANAH MERAH

SOLD $700,000 Land: 2,001sqm

SOLD BY JAMIE DAVEY! Development site with holding income from existing rental property DA in place for 11 x 150sqm* 2 storey townhouses BA and OPW completed and ready for submission 2,001sqm* Site zoned low-medium density residential The block is approximately 80 meters in length and 25 meters in width Well positioned with great proximity to the Loganholme shopping precinct

JAMIE DAVEY Associate Director of Commercial 0400 763 772 jamie.davey@raywhite.com

13

JUST SOLD Featured Properties This Month INDUSTRIAL

50/8 Distribution Crt ARUNDEL

SOLD $693,000 + GST Land: 237sqm

SOLD BY ANGUS PAGE! Sizes ranging from 111m2 to 585m2 Priced from only $308,000 + GST Fantastic lease options available with attractive incentives Concrete tilt panel construction Each unit features LED lighting, 3-phase power and container height electric roller doors Showers and amenities in each unit with mezzanine Associate Director of Commercial Ample designated parking 0433 627 769 angus.page@raywhite.com

ANGUS PAGE

14

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.

15

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 (COVID-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.

16

Things to watch when purchasing a childcare asset: Just like buying most commercial tenanted investments, you are purchasing the property not he business, however in some cases this is on offer together as a going concern, so be aware of what you are purchasing.

Check the lease and licence agreements; childcare assets are subject to stringent regulation regarding the number of children and occupancy standards. Be certain what these are and whether the tenant is adhering to these agreements as your income is often tied to them.

Outgoings will be paid by the tenant; there are high standards and regulations around the condition of childcare assets, this is the responsibility of the tenant and should be built into the lease agreement. Similarly, other outgoing such as council rates, land tax and utilities should all be included in your agreement.

Financing may be a little more difficult compared to other assets, the lender my impose differing loan value ratio requirements (however childcare is far better than other alternative assets such as service stations) which could alter the amount you can borrow.

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

Consider the location; in the rush to secure an asset don’t forget the important fundamental of real estate, location, location, location. Growing areas will ensure longevity in your occupancy level which means stability of income and potential capital growth.

Research; look to find out what other similar sized and quality assets have sold to get a greater idea of value and don’t let FOMO take over.

The demand for childcare assets over the last year has been unprecedented with enquiry levels at a high and assets transacting at low yields. While the bulk of assets which have sold across Australia are within metropolitan areas, the appetite of buyers has grown to include regional assets which historically were discounted reflecting the increased risk. We continue to see this gap narrow as the weight of funds in the marketplace create greater competition and push prices which will be further stimulated by the increase in Federal Government subsidy for childcare users.

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.

17

KNOW THE TEAM

AVI KHAN Director 0400 666 809

ANGUS PAGE

Associate Director of Commercial

0433 627 769

RACHAEL CURTIS

Director of Commercial Property Management

0490 471 535

JAMIE DAVEY Associate Director of Commercial 0400 763 772

GENEVIEVE TREW

Group General Manager

07 3805 3108

Prepared by:

COMMERCIAL BY RAY WHITE AKG 18

For Any of Your Commercial Needs

SELL & BUY LEGAL

0406 886 611 contact@sellbuylegal.com.au

sellbuylegal.com.au

COMMERCIAL BY RAY WHITE AKG We are passionate about providing outstanding experiences and results for our clients.

We are proud of every transaction