Raine & Horne Commercial has released its latest Commercial Insights Report H2 2024, detailing the market for commercial property across the Group’s national network, where rising interest rates continue to be an influential theme, with the cost of money having the biggest impact on the retail and office sectors.

The report highlights the work-from-home trend – a lingering after effect of the pandemic – is continuing to impact office and retail markets, particularly in the Sydney CBD office market.

Industrial property remains the best performing and the most tightly held market. Lower levels of tenant demand is leading to increasing vacancies, a slowdown in rental growth and expansion in yields, which is in stark contrast to conditions seen twenty four months  ago.

Mr Chris Nicholl, General Manager, Raine & Horne Commercial said owner-occupiers are continuing to take advantage of the benefits of property ownership, driving demand in many markets.

“These buyers are seizing opportunities in softening markets, unfazed by potential vacancies or investment returns,” he notes.

Industrial property takes the lead in many states

The report highlights how steady owner-occupier and investor interest supports a development supply pipeline, while yields are softening impacted by lower demand and the cost of money.

In Liverpool, NSW, a strong industrial market has seen high demand for smaller industrial units 500 sqm or less, with limited stock for sale and lease, causing prices to remain buoyant.

On the Central Coast of NSW, post-pandemic, many businesses are moving their operations out of homes. Simultaneously, expanding e-commerce and trade businesses are upgrading from smaller industrial units to larger, higher-quality spaces.

A scarcity of industrial stock was being felt in Townsville, QLD, while in WA, the industrial land market has seen recent sales indicating about a 20% annual increase in land prices from 2023 to 2024.

Adelaide’s industrial market remains robust, thanks to businesses being relocated from South Road in the inner west as a result of the compulsory acquisition of properties to make way for the Torrens to Darlington (T2D) tunnel project.

Newer, well-located Sydney CBD office buildings show resilience

The report notes up-to-date and better positioned buildings within proximity to transport infrastructure and amenities are faring better in the current market.

Meanwhile, professional and financial services sector tenants are the most active in the market.

A flurry of Penrith development benefiting all market sectors

Significant State Government investment in the Penrith area, including the Western Sydney Airport, Nepean Hospital, WestConnex road upgrades and the new Metro train stations, is stimulating the local economy.

Historically low stock levels is being noted across all asset classes.

Gold Coast’s population increase driving demand                

The impact of an influx of former Victorian residents to the holiday destination, in addition to tourism numbers slowly returning post-pandemic levels, is driving the commercial market.

Outer suburban precincts of the Gold Coast continue to outperform the region’s tourism centre.

Retail and office markets in Canberra remain steady

A consistent supply of new stock in mixed-use developments and re-sales, are being snapped up by steady demand.

Rising interest and council rates have done little to deter interstate investors who remain focussed on purchasing ACT commercial properties, particularly when new leases are in place and property values are below $1.8 million, aligning with the stamp duty-free threshold in the ACT.

A full copy of Raine & Horne’s Commercial Insights Report H2 2024 can be downloaded from here.