Where Are The Australian Commercial Property Opportunities?
There’s been plenty of doom and gloom headlines surrounding commercial property, so it can be hard to imagine that there are actually huge opportunities emerging.
Properties centred around discretionary spending, whether it be leisure, hospitality or retail, have unfortunately taken the biggest hits through COVID-19. Office spaces are also feeling the burden of the global pandemic, with more and more employees transitioning to remote work.
But at the same time, a huge window of opportunity has opened in a number of other commercial sectors, creating increased and new demand for suitable properties.
And these are not just short-term COVID-19 trends that will be here now and dissipate as the pandemic passes, many of these booming sectors are fuelling our ‘new normal’.
So if you’re looking for commercial property opportunities, here’s where to focus.
Supermarkets and non-discretionary retail
Retail outlets have taken a dive, but we can still rely on our ‘essentials’ spending for food, housing, utilities, cleaning and more. Supermarkets are performing exceptionally well and are continuing to boom, as people respond to varying restrictions across the country.
Major supermarket chains like Coles are growing, while some shopping centres have remained resilient thanks to the access they provide to essential food outlets.
Other real estate within the non-discretionary sector is equally attractive.
Convenience and fuel
Beyond supermarkets and retail outlets, spending on essentials continues to grow and is shining a spotlight on convenience-based real estate. The most promising convenience outlets include those with groceries and pharmaceutical goods. Despite more people working from home, petrol stations are also still a reliable prospect, aided by their higher margins from low crude oil prices, together with the fact that people aren’t able to travel overseas or limited interstate travel, which means the local tourism industry is experiencing boom times, and fuel outlets are a direct beneficiary of this.
Warehouses and industrial property
E-commerce and online shopping have been on enjoying great growth for years and trend has always been up, but COVID-related lockdowns, social distancing and other restrictions have seen the demand for online retail outlets skyrocket.
More and more businesses are transitioning online, increasing the need for warehouse storage facilities, logistics, and distribution and fulfilment spaces. But it isn’t just retail – online food shopping has experienced a sharp rise as many supermarkets now offer delivery or click and collect services. This places great emphasis on cold storage assets, with the Australian cold storage sector now being valued at $5 billion.
Outside of e-commerce, smart warehouses and modern logistics spaces are highly sought-after to support the growing demand for the production and storage of pharmaceutical goods. With more Australians paying even greater attention to their health, investors can feel confident in putting their money towards industrial properties suited for pharmaceutical tenants.
Finally, Australian manufacturing is now back on the agenda, with a growing need for industrial properties to support these activities.
It’s not just the physical storage facilities we’re after – the cloud is equally in hot demand. This year has seen a huge transition to remote working, alongside a notable growth in Internet of Things (IoT), social media, phone apps, online gaming and more. So, it heavily increases our need for data storage and processing requirements. That’s where data centres come in. Our reliance on the cloud and internet will only continue in the long-term, so data centres are a top choice in the commercial property market.
Get advice on your next commercial property move
While times are tough, is it important to play the long game and stay patient – both as a commercial property investor and a tenant - while also recognising the rare opportunities that are emerging from these challenges.
It is more important than ever to avoid the uncertainty and get advice from a commercial property adviser about your strategy going forward – not just for your needs tomorrow, but also to the long term.
Contact us to discuss your needs. No obligations.
Managing Director, Broadway Property
Director, Broadway Property