June Market Update
In the second series of market updates, Directors and Commercial Property experts Steve Tsimos and Matt Brown have shared their views on what’s happening in the current Melbourne market.
As a general overview, the duo inform us that across the portfolio Tsimos Commercial manages, their business owner tenants are steadily returning to normal trading patterns and paying back their rent deferrals.
To simplify the commercial property landscape review, its best to explore the three asset classes of Commercial Property–Retail, Commercial and Industrial.
The Retail market is starting to bounce back which is surprising, but in Steve Tsimos’ view, it is testament to the fact that there is pent up demand, and many retail operators have pivoted and adapted to the changes in consumer purchasing patterns. Some of this resilience is due to a community-based ‘go local’ response, where customers have got behind their local retail businesses and rallied to support and protect them.
Likewise, retail tenants have become savvier and more creative about their space usage such as what size and fit out they really need.
Commercial spaces – Here the duo tell us that the trend to move away from the CBD and closer to home has had an effect and resulted in a demand for smaller suburban 50-60sq metre offices to lease. Smaller spaces are still leasing consistently, but leasing rates compared to pre covid rates are approximately 10% down.
Industrial – The Tsimos duo say that the level of enquiry for industrial properties has also increased post the most recent lock down which is encouraging and that stock levels are still low but with a steady flow. Stock levels are noticeably low under the $1million sale price.
Due to the shortage in stock, Industrial sales are achieving sale prices continually pushing well above averages. The results are very promising and an exciting market to be a part of.
A tip from the Tsimos Directors? –
If you can secure a reasonably priced warehouse now that’s for multiple uses – ie to lease and divide into various tenancies, this is a solid and wise move.
