Perfect Storm for Rental Growth?
The commercial and industrial sales market of the Hills District has recently experienced positive levels of capital gains of up between 20-50%. However, the leasing market have been modest in comparison staying steady with some more recent transactions pointing to a moderate growth of up to 10%.
Greg Langford, Director at THiiNK Commercial believes further rental growth is on the horizon and investors should receive a positive uplift in the short to medium term.
“There have been a number of recent office deals in the last few months, even in the larger 300+ sqm range which have pointed to office rates of between $350-$360sqm net whereby the average expected was between $300-$330sqm net.
“Not only have the rents increased, but the level of enquiry is seeing competition come into the marketplace. There is a good chance that if a property is advertised 3 months to the expiry of the outgoing tenant it will be leased with minimal down time between tenancies.”
Other positive signs of positive growth in the leasing marketplace is the significant re-rating of ‘expected’ rent free periods which depending on lease terms have halved, in some cases the incentive is non-existent.
The industrial market has experienced higher levels of rental growth of between 10-20%, with an extreme tightening of incentives, due to the current stock shortage between 100-300sqm. Some prospective tenants will forgo this point of negotiation to improve their chances of securing a premises. A low vacancy rate has attracted multiple tenants bidding for space when a property becomes available to market.
Stock is only getting tighter and as a result THiiNK see a positive future for rental growth in the Hills District.
The Hills District market is changing, and through the right management and advise the value of your property portfolio should be increasing at such a pivotal time in the marketplace.
Contact us today to discuss how we can benefit you to assist with all of your commercial or industrial requirements.