Like the housing market, commercial property has had a huge boom since the pandemic – especially industrial land, a local agent says.
Local commercial property agent Mark Osmond said commerical property yields for retail and office spaces have risen by around 0.5-1%.
“Buyer are looking at, depending on the asset, [a yield] between 6.5 and 7%,” Mr Osmond said.
“Where as it [used to be] 6 to 6.5%.”
But he said the biggest change was to industial properties.
“The real demand in the market, where the interest lies, is in industrial land and industrial warehouses,” he said.
“There’s a huge demand – to buy and to lease.”
Mr Osmond said he sold an industrial property that was on the market for only a day.
“The first person that went through made an offer there and then – we didn’t even get a chance to put it online.
“I asked the owners if we could put it online, just in case the sale falls over… and we got another six to eight inquiries on that property.
He said he’d seen demand of this level once before when he started commercial sales in 2007.
“I started in the Global Financial Crisis,” Mr Osmond said.
“When I started… everyone for the year prior was doing pretty much what they’ve done for the last year.
“There was a lot of activity, a lot of buoyancy, and then all of a sudden it stopped.
“So, prior to 2007, it was a similar sort of market, but maybe for different sorts of reasons.”
He said he didn’t have a crystal ball, but he anticipated the market would soon “flatline”.
“The likelihood is that it will get to a certain level and it will start to level out, but the thing is, with your industrial property… there’s very little land around [but] a huge demand for it.”
Ms Osmond voiced concern for owners, whose future incomes might not always satisfy their repayments.
“That’s why someone that can afford to buy outright, or put a substantial deposit down, can help to reduce the cost,” he said.
