Adelaide commercial property set to thrive in COVID free bubble
Through the chaos of COVID-19 the outlook for commercial property has been mixed, depending on who you talk to (and what you read, watch and listen to).
For each city and region, the impact will vary. But for Adelaide, the future of commercial property looks bright.
As South Australia has remained mostly COVID-free, the local economy has been able to quickly bounce back – not only minimising the damage for commercial property investors but also positioning them to thrive.
The Adelaide market is already catching the attention of local, interstate and offshore property investors and the message from many commercial property experts is clear – Adelaide is the city to invest in post-pandemic.
Adelaide has been a stand-out from the start
It should come as no surprise that the commercial property market is well positioned in Adelaide as we very slowly transition into a post-pandemic world. Back in March when we were first hit with the reality of lockdowns, job cuts and market downfalls, Adelaide felt the pain but the commercial property market held up under the pressure.
With a responsive government, a smaller population and effective health system, the human impact of COVID-19 was quickly minimised which has been a great thing for the local economy.
Adelaide has also typically been a consistent, reliable commercial property market. South Australia’s economy, with its diversity, large public service and smaller, more agile employers, was well structured and prepared to adapt and ride out the pandemic.
Confidence is growing in South Australia
Australia has certainly felt the impact of COVID-19. Victoria has been battling through a second wave, while New South Wales and Queensland have also felt the pressure. However, South Australia has held strong thanks to the state’s quick and effective pandemic response. Now, with a healthy, infection free population, the community sentiment about the future is largely positive.
There’s a confidence from the South Australian population that returning to a somewhat normal lifestyle, venturing out and doing business again is achievable. A recent report from PwC Australia supports this, revealing that there are almost the same number of cars on the road as pre-pandemic, with more South Australians travelling for work, shopping and recreation.
This is important. Growing confidence in Adelaide will become a key driver of the commercial property market. There’s confidence in health and safety, which impacts consumer spending, which impacts jobs and, at the end of the day, the commercial property market benefits.
Adelaide city is coming back to life
South Australia has been out of lockdown for some time, allowing the economy to improve and unexpectedly grow to beyond pre-COVID levels in some industry areas. Fortunately, employment is bouncing back in many sectors, including manufacturing, health and fitness, retail, hospitality and childcare. In fact, both employment and wage performance currently sit above the national average.
With more businesses re-opening and returning to normality, leasing activity and enquiries over the past couple months in Adelaide have also increased. Previously, Melbourne and Sydney CBD’s have been the bustling commercial and business hubs of Australia. But with both cities finding their way out of crisis mode, Adelaide’s smaller city centre has suddenly become very appealing to larger organisations and corporates looking to distribute, or decentralise, their operations. And with the benefits of lower rent, reasonably stable property prices, record low interest rates and a more convenient lifestyle, why wouldn’t you make the move?
Commercial office spaces are bouncing back
Despite the increase in remote work during these past few months, office vacancy rates have barely moved in South Australia. Yes, some sectors were certainly impacted by COVID-19, but the facts indicate the overall impacts were slight.
In particular, the July 2020 Office Market Report from the Property Council of Australia revealed that office vacancy rates only rose from 14% to 14.2%. This is largely thanks to Adelaide’s minimal sublease stock on the market, which is far below levels seen in Melbourne and Sydney.
Now, with a decent portion of South Australian workers leaving their homes and returning to the office, CBD occupancy rates are continuing to rise, and commercial office spaces are strengthening in value.
The South Australian population has the potential to grow
Finally, with such great outcomes during and post COVID-19, Adelaide boasts an appealing profile for new residents in the future. Population growth would have a flow-on effect for the economy and continue to drive demand in the commercial property space.
Looking to invest in Adelaide’s commercial property market?
The time to seize these opportunities is now. Especially if you’re an investor with a long-term strategy, you could certainly reap the rewards from Adelaide’s commercial property market. It’s crucial you seek advice on the best commercial properties to suit your strategy and goals.
Our advisers can help.
Contact us to discuss your needs. No obligations.
Managing Director, Broadway Property
Director, Broadway Property