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Is 2018 looking for Commercial Real Estate industry?

The way commercial real estate market has changed in Australia is commendable. Australia has experienced a phase where the demand for commercial properties was extremely high – which led to high prices and firming yields. Instead of this, the real estate market is stable and gaining momentum with each passing year.

In 2017, there was substantial growth in the commercial real estate sector. Business owners have invested their capital in spacious, highly-scalable and adaptive commercial buildings in the top locations of Australia, especially Central Business Districts of Sydney, Melbourne and Brisbane. And this trend is expected to continue over the next five years.  

Potential investors have been buying office spaces in the major cities of Australia, such as Sydney, Melbourne, Brisbane, Sunshine Coast, Adelaide, etc to upsurge the chances of success. In fact, tenants are also getting opportunities to buy affordable commercial spaces on lease to reap ultimate benefits of the location and other high-end amenities on flexible lease terms. In short, things look affirmative in 2018 for commercial real estate market, and real estate experts are expecting a rise in the demand for commercial properties, especially in Sydney and Melbourne. And the best part is that smart buildings and robotic technologies will take this momentum to the new heights in 2018. Well, this is just a prediction, but you can plan your investment goals accordingly.

If you are looking for a spacious commercial space for sale in Australia, don’t forget to visit CommercialProperty2Sell. It is one of the leading web portals where you can buy and sell commercial properties across Australia in a matter of few clicks. It is a perfect place for potential business owners, property investors and occupiers of office buildings.

Let’s look at some of the trends that are expected to see in the Australian commercial property market in 2018:

 

1.      Smarter Buildings and Robotic Technologies

With the constant evolution of high-end technologies, we are expecting a significant boom in demand for commercial properties in 2018. Australian commercial real estate industry is getting more competitive with the introduction of smart buildings, new-age technologies and automation techniques to ensure comfortable working environment while maintaining consistent temperature across the office space.

Smart commercial buildings use analytic technology and embedded sensors to let you monitor and fine-tune energy usage, daylight penetration, humidity, temperature, fresh air and lighting levels for better comfort and higher energy savings.

In fact, in Australia, 200 George Street in Sydney is the real example of the smart building– thanks to the Artificial Intelligence (AI) technology. Leading property construction companies and internet giants are making a huge investment by acquiring this super-amazing technology.

Artificial Intelligence (AI) thinks intelligently and copies the cognitive actions of humans such as observing surroundings, learning new things and solving problems. The technology is used to create expert systems with the aim to express intelligent behaviour, demonstrate, explain, and advice its potential users.

In a nutshell, cutting-edge technologies would open a fantastic opportunity for potential buyers to pour their money in such comfortable, adaptive, and highly-developed spaces – which is good for the commercial property market.  

 

2.     Safety & Security will continue to rise

Safety and security within the office space will remain the topmost priority throughout 2018. Security in commercial spaces is becoming more obvious in Australia.

In fact, building owners are now heading towards highly-advanced methods such as fingerprinting scanning, Phone ID scanning, and facial recognition to enhance the safety and security measures within the commercial premises.

Here the aim is to provide the highest level of security without distracting the working environment of an organisation. The implementation of these advanced measures will ensure a safer environment for workers and visitors.

There will be more focus on the safety and security measures in commercial properties in 2018. Even, the property buyers will consider these factors while buying commercial spaces for their businesses in Australia.

 

 3.     Flexibility and Feasibility

When it comes to fulfilling tailor-made real estate requirements, the term ‘flexibility’ is the first thing that strikes to our head. This is one of the most promising trends that is expected to grow in 2018. It is a good news for both commercial property buyers and sellers.

Real estate industry experts believe that co- working environments will increase in commercial buildings and this will allow small business owners to buy small suites in their buildings. This not only increases competition but also give flexibility to occupiers to run their business in an adaptive co-working environment.

Instead of focusing on start-ups, co-working providers would target spacious and leading corporate in the coming years. This trend will hit the Australian commercial property market shores in the next 4 to 5 years.

Also, there will be an implementation of a new strategy where the sublessor occupier can provide additional space for expansion (if required) and to collaborate with the leading businesses, introduced by co-working providers. This would boost the productivity and increase the other high-end opportunities within their own commercial buildings.

Over the last few years, property buyers are seeking short lease terms and extent depending on their business growth and market opportunities. You will also see great flexibility in these lease terms as well – which is good for small business owners and novice entrepreneurs.  

 

4.     Shared Workspaces

Since buying a commercial space in the CBD areas is becoming expensive, property buyers are more inclined towards shared workspaces, and this trend continues to grow in 2018 as well.  

There is a strong prediction that small business owners would invest more in shared workspaces to save real estate costs and get the most out of their work. They are more towards creating a remote organisational structure to let people work offsite in a comfortable environment.  

This means the demand for short-term project spaces, large meeting spaces and seasonal work surges will increase in the future ahead.

In Australia, you can find many commercial buildings that are providing shared or flexible spaces within their assets. If you are interested in buying such office space, then visit commercialproperty2sell. There you can find multiple options for shared workspace, meeting spaces, project spaces, even spaces, etc.

While these trends are expected to set the standard of the commercial real estate market up, below are some commercial properties sectors that will leave positive or negative benchmark in 2018:

 

5.    Demand for Shopping Centres Would Decline

The retail industry in Australia has always been the safest commercial property type. There are strict planning management systems for shopping centres in different regions of Australia. With the slow and steady growth of population and introduction of international retailers, the demand for shopping centres has elevated in the last few years.

However, with the entry of Amazon, consumers are driving more towards online shopping over brick-n-mortar stores. And undoubtedly, people will be shopping more online in the future, which will automatically reduce the demand for shopping centres in the Australian commercial real estate market.

Of course, the traditional shopping habits are changing, but you can’t assure that the demand for shopping centres in Australia would diminish in the future. There will be some retailers who wish to re-create the aura of traditional shopping again, and they will bring some innovative techniques to enhance the way people shop in brick and mortar stores.

 

6.    Industrial Property Market Will Be On Top

Due to the evolvement of high-end technologies, there is a significant rise in the Industrial property market in Australia. And the demand for Industrial properties is expected to grow further in 2018.

Most of the eCommerce businesses are buying industrial properties, ranging from small warehouses to spacious distribution stores.

Plus, the food manufacturing industry is seeing a boost from Chinese demand and that too requires warehousing. The reason could be anything, but nobody can deny the fact that industrial property type is expected to grow in 2018 across Australia.

 

7.    Future Demand for Office Spaces in Major Cities of Australia

The next best returns from commercial property investment will come from office spaces in Melbourne and Canberra. In fact, the Brisbane factories are doing pretty good when it comes to generating higher returns on investment in terms of capital gain or rental growth.

While finding commercial space in Sydney is difficult, Perth and Brisbane’s office market is giving the tough call to tenants in recent years. Rising iron core prices, higher demand for lithium and increasing automation of mines from centralised areas are all expected to impact demand.

On the other hand, Sydney and Melbourne's commercial spaces remain under-valued over the next five years despite strong price growth in the recent years. Plus, there will be further growth in rental income due to strong demand-supply chains. When it comes to Sydney’s CBD, the withdrawal of commercial premises for new developments and the Metro rail line reduced the supply at the time. Now the result would shift towards rental gains.

According to some recent stats, Sydney commercial real estate will see a 100 % interest rate of return over the five-year horizon while Melbourne commercial spaces will see 8.2 % in the future. Also, large and spacious retail stores are expected to see an 8.5 percent return over the next five years.

 

Conclusion

Are you planning to buy a commercial property in Australia in 2018? With the high level of transparency, strict planning controls and diverse commercial property types, there would be great opportunities for higher returns – capital gains and rental growth in the future.