Updated: Jun 22, 2021
When taking the leap into commercial property the main thing that you need to understand is that it’s all about the numbers and there should be no emotion about the property. If the numbers don’t stack up, move on to the next deal and there is always another deal around the corner.
Understanding the current supply and demand for your chosen investment vehicle is extremely important to guarante your success.
This might not seem that important while the property is leased, but when that tenant leaves you will be wishing you paid attention.
This has become even more apparent to me as I search locations for self storage facilities. The entire success of a self storage business depends on having strong demand for that service and if the supply to demand ratio is out of whack, I am going to be caught out pretty quickly and I'm not in the business of guessing.
As a self proclaimed property nerd I have found it extremely difficult to source reliable statistics for commercial property investors, so I have taken it upon myself to collect data each month on #Office, #Retail and the #Industrial sector to help our community make better decisions with reliable data backing it up.
Lets start with the Office Sector or Office Apocalypse as I like to call it.
#Townsville Tops the list with 806 spaces currently For Lease. I have spoken to boots on the ground agents with good knowledge of this location and the general consensus is, the A grade stock has been moving nicely but there is a lot of C grade stock that has been sitting vacant with no end in sight.
So this market needs to be navigated by a seasoned investor that has the reserves in place to weather a long period of vacancy.
Townsville once again tops this list with 543 spaces listed for rent. This is also very troubling and I suggest possibly avoiding this sector until it comes back into balance.
It you look at the table, I have included an ALL TIME LEASED column which displays the total amount of properties ever advertised for that sector in that location. The problem with this statistic is that if one property has been listed multiple times it will dilute the FOR LEASE / ALL TIME LEASED percentage.
In smaller markets where there is less activity this might not be as reliable but in the case of Townsville where the total amount of #properties FOR LEASE is 543 and the total amount of properties ever advertised for rent is 670. That calculates to a FOR LEASE / ALL TIME LEASED percentage of 81%. That is ridiculously high! and should keep any investor awake at night.
Townsville gets the trifecta here with 431 spaces advertised for lease.
Now if you cast your eyes down to the Sunshine Coast, Newcastle and Central Coast you will see that even though they have made the #Top10List of most properties #ForLease, They are actually strong markets going by the numbers.
Take a look at the FOR LEASE / ALL TIME LEASED %. Considering the total number of industrial spaces that has ever been listed for rent in the Sunshine Coast is 1785 and the total number of spaces for #lease is only 178 that's only 10% of the total supply in that market. That should give you confidence that if, and when your property goes vacant, there is considerable #demand in that #sector.
As always the nature of property is that the markets are forever changing and thats the true beauty of real estate. Today there might be very little opportunity in a sector but for those who are paying attention, tomorrow might be a completely different story.
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0410 694 633 and I will keep creating it for our community.
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Managing Director - Develop a Life
Host & Creator of The Commercial Property Show Australia