2022 in Review: Commercial Property Still a Winner on the Sunshine Coast

There’s a real sense of momentum in the Sunshine Coast commercial market, a hardiness and confidence that’s riding any waves of uncertainty and leaving them in its wake.

Investors are still investing. Business owners are still growing their businesses and looking to the future. Despite interest rate rises in the second half of the year, there seems to be a determination from both investors and business owners to push through whatever is thrown their way and soldier on.

Ray White Commercial Principal Paul Forrest believes there have been so many recent challenges that businesses have learned to adapt.

“The resilience of the Sunshine Coast commercial property market continues to set the region apart as an attractive place to invest and do business. People are growing their businesses, forging ahead. Many people were predicting the Sunshine Coast market to crash through COVID but it didn’t, and it’s still strong,” Paul said.

COAST COMMERCIAL MARKET REMAINS ENERGETIC

Coming off a two-year period of high sales volumes and compressed yields, the Australian commercial property market overall is showing some signs of decreased investment activity and yield correction.[1]

Ray White Commercial Principal Paul Butler says that while there is some normalising evident, the Sunshine Coast commercial market  remains energetic.

“I think that we are yet to see impacts of inflationary pressures and interest rates on commercial property here on the coast. We still have a fairly robust economy and that is self-sustaining at this point in time,” he said.

“At a recent Noosaville industrial property auction, there were 30-40 people in attendance and lots of enquiry. The ultimate sale figure of $3.08 million was something we wouldn’t have dreamed of three years ago. There’s still an unbelievable amount of interest in Sunshine Coast commercial property.”

LIMITED SUPPLY AND INCREASED LEASING RATES

All Sunshine Coast commercial sectors have performed exceptionally throughout 2022 with a shortage of stock to meet demand, the consistent theme.

Commercial Property Consultant Tracey Ryan said continued tightening supply places upward pressure on leasing rates maintaining returns for investors.

“For the first time since the GFC we can confidently say that leasing across all commercial sectors has risen significantly in the last 12 months. Previously the average retail rental rate for Peregian Beach and Noosa Junction was $500/sqm, $750/sqm+ is becoming the norm.

INDUSTRIAL FULL STEAM AHEAD

Industrial has proved to be an outstanding performer and has moved on from being considered a secondary asset class to a premium one, given the changing way in which the community interacts with industrial property.[2]

Industrial has been the golden asset class of the last few years across the country and the Sunshine Coast is no exception. Demand has been growing off the back of logistics, distribution and transport, particularly last mile solutions, together with the growth in small business and local manufacturing.

“There simply isn’t enough industrial stock to support the number of people who have moved here,” says Commercial Property Consultant David Brinkley. “The sector didn’t miss a beat throughout COVID and kept on going. Properties around Noosa have been really firing and smaller footprints up to around 200sqm have seen record prices achieved.”

“As industrial property uses change, demand for higher quality industrial properties has risen. Investors and lessees are expecting better finishes, such as epoxy finished floors, painted inside walls rather than bare concrete, 6+ metre clearance rather than 5 metres and perhaps an air-conditioned office space.”

RETAIL BOUNCES BACK

We have seen the reinvention of many retail centres and strip shops over the last few years, capitalising on the growth in alternative uses such as medical and service businesses, as well as more creative food and beverage offerings.

“Sunshine Coast retail was another highlight performer in 2022 and has bounced back strongly after the lows experienced during the height of the pandemic,” said Paul Butler.

“This is probably due to a number of factors. Procurements seem to be back on track with stock supplies from overseas returning to more normal conditions, and the cost of shipping goods in containers has come down.

“Hastings Street is all but full, Noosa Junction and  Noosaville are thriving,  Maroochydore retail  demand is growing on the back of the new city centre development, Bulcock Street in Caloundra is full and there are very few available spaces in most other centres.”

NATIONAL TENANTS EARMARKING FUTURE LOCATIONS

Another sign of the strength of the retail market is the active interest from national tenants who are leading the charge in Hastings Street and beginning to explore other locations across the coast.

“We have a backlog of national tenants trying to get into space in Hastings Street. They’re taking a long term view, and not shy to wait 2-3 years for specific positions. We have seen existing tenants eager to take up their options, others requesting additional options as their leases approach completion… with the majority of tenants eager to hold their position on the street and ensure they aren’t pushed out by another tenant eager to get their foot in the door.” says David Brinkley.

“We’re also seeing a similar picture emerge in Noosa Junction. National tenants now have the Junction on their radar recognising the potential of the area as an entertainment hub servicing locals and drawing tourists. This area will continue to go from strength to strength in the coming years.”

MOVING TOWARDS A NORMALISED MARKET

As the market normalises, interest will remain high but we expect to see more negotiation, particularly while vendors remain above market and purchases seek below-market prices.

“A return to normalised conditions means a more discerning market where you need to find the right people for the right property. Purchasers want a property that closely suits their needs without requiring major upgrades or expensive fit-outs.” Paul Forrest said.

With interstate migration showing no signs of slowing, continued investment in infrastructure across the region and the Olympics and Paralympic Games coming in 2032 we expect the coast commercial market to weather any coming market fluctuations with relative ease.

SALES SUCCESSES FOR 2022

The team at Ray White Commercial has chalked up some impressive achievements for 2022 across the region from Maryborough and Rainbow Beach, through to Noosa, Maroochydore, Landsborough and all areas in between.

Following is a selection of interesting and diverse accomplishments for this year.

Noosaville Commercial Units: Sold for $1.75 million, March 2022
3 & 4, 253 Gympie Terrace, Noosaville
Two first floor units in a well maintained complex with water views (total 152m²*). The successful buyers secured the property against multiple bidders and several post auction buyers. Achieved $11,513.16/sqm.
Agents: Tracey Ryan and David Brinkley

Tewantin Land Parcels: Sold for $2.9 million prior to auction, April 2022
23 & 25 Sidoni Street, Tewantin
Two of the last parcels of land in Tewantin CBD. Total area 2,006m²*. The market was firing, with a large number of enquiries and the purchasers eager to take the property off the market prior to auction. $1,445.66/sqm achieved.
Agents: Tracey Ryan and David Brinkley 

Rare Industrial Land in Noosaville: Sold for $3.08 million at auction, July 2022
144 Eumundi Noosa Road, Noosaville
There was significant interest for a rare 1,797m²* of industry designated land on the main road into Noosaville. Spirited bidding on auction day resulted in great results for the vendors.
Agents: Tracey Ryan and David Brinkley 

Rainbow Beach Shopping Centre: Sold for $4.43 million at auction, September 2022
Lots 1-9, 48 Rainbow Beach Road, Rainbow Beach
The dominant centre in a popular tourist destination sold to a private Queensland investor following a tightly contested auction with six registered bidders at a yield of 7.32 per cent.
Agents: David Brinkley and Paul Butler

Premium Tenanted Investments, Noosaville: Sold for $3.075 million / $1.925 million, November 2022
Lots 2 & 3, 5 Gibson Road, Noosaville
Lot 3 in the heart of Noosaville’s shopping precinct was sold on auction day. The team then proactively marketed Lot 2 to the auction underbidders, securing a sale for just under $2 million. Both properties sold for a sub 4% yield which reflects the strong Noosaville market.
Agents: Chantel Dielwart and Paul Forrest

Boat Hire Business and Noosaville Foreshore Leasehold: Sold September 2022
290 Gympie Terrace Noosaville
The most prominent watercraft business on the Noosa River, T Boat Hire plus the accompanying riverbed/foreshore leasehold hit the market for the first time in over 20 years and sold for an undisclosed well north of $3 million.
Agent: John Petralia

New Boutique Industrial Units, Landsborough: Sold $2,367,590
1-5, 23 Lenco Crescent, Landsborough
5 unit Industrial development. One of the first developments out of the ground at the Corporate Place Industrial Estate. All 5 units sold off the plan, prior to completion.
Agent: Tallon Pamenter

Refurbished, Well-known Mooloolaba Property: Sold for $3.6 million, September 2022
209 Brisbane Road, Mooloolaba
After the 350m²* building was fully refurbished and given a second life by our repeat client, the property was sold off-market within one week of obtaining listing and then leased off-market. Achieved $10,285.71/sqm.
Agent: Tallon Pamenter

Low Impact Industry Property at Kunda Park: Sold for $4.65 million, December 2022
1-3 Kessling Avenue, Kunda Park
An 8,305m²* industrial development site sold for $450,000 over reserve to a repeat client with a new development coming soon.
Agent: Tallon Pamenter

Multiple Sales at Wide Bay Industrial Estate, Maryborough: throughout 2022
1-42 Enterprise Circuit, Maryborough
The Wide Bay Industrial Estate located adjoining the Bruce Highway has seen strong sales activity with a further 5 lots under contract and 1 lot under offer.
Agent: Adam Morley

For a chat about the current commercial market or for any enquiries, contact our team on:

Noosa and Maroochydore offices: +617 5474 7600
Caloundra office: +617 5491 4600

[1] Vanessa Rader, Ray White Commercial Property Update,Commercial Investment still winning over the long term.
[2] Vanessa Rader, Ray White Commercial Property Update,Commercial Investment still winning over the long term.

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