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Commercial real estate in the Hunter region is enjoying a flurry of activity as investors seek safety from rising interest rates and subsequent market activity.
Warren Plumb, partner at Raine & Horne Commercial Newcastle, said demand is high across the board — with industrial properties in Lake Macquarie’s Morisset and Newcastle’s Cardiff among the most desired.
At present, properties in these areas are “selling for $4,000 square metres, an unheard-of-rate for Newcastle”.
“The signboards aren’t even up, and we’ve sold a half dozen of these properties,” he quipped.
Migration away from capital cities is driving demand for commercial property in the Hunter region, according to Mr Plumb, who explained how people want to “escape high-density living, more people continue to shift to Hunter to live, but they are also relocating their small businesses here too”.
“The ongoing migration away from the major population hubs in deriving the robust demand for industrial units and other commercial properties,” he added.
From his standpoint, a concoction of the residential market correcting and cooling as well as the increased volatility in the global and domestic share markets have added to the demand for commercial properties.
“We often see that when interest rates rise, and the other asset classes take a breather, investors refocus on commercial assets,” Mr Plumb said.
Currently, across the Newcastle region, yields are averaging 5.3 per cent for retail properties, although this increases to 5.5 per cent for office assets and 6 per cent for industrial space, with Mr Plumb expecting these yields to rise throughout the back end of the year.
He believes such rises will be a continuation of the moderate uptick seen in the Newcastle retail market since the ending of lockdowns at the conclusion of 2021, while expressing his expectation that the industrial market will continue to substantially life, especially given the scarcity of industrial land in the Newcastle region and the surging demand from investors.
As for the office market, he expects only a slight change to occur as the year pushes on.
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