Through 2021, the commercial property market has been shaped by a trio of driving forces. Let’s take a closer look at what they are.

Low interest rates

According to Angus Raine, Executive Chairman Raine & Horne, it’s a no-brainer that low rates on cash savings are encouraging investors to seek assets with higher returns, and this has certainly been a leading force behind rising demand for commercial property.

However, today’s record low interest rates have fuelled a new, and ongoing phenomenon – the rise of the owner occupier. “In many areas it is now cheaper for businesses to own rather than lease their premises,” Angus said. “Not only is this underpinning high demand for commercial properties – especially those sold with vacant possession, it is also putting a squeeze on leasing markets as fewer properties are available to lease.”

The impact of COVID-19

The pandemic, and in particular lockdowns and the growing trend to work from home, have had varying impacts on the commercial property market both in terms of geography and sector.

In those states, regions and cities where there has been minimal or zero lockdowns in 2021, Raine & Horne Commercial Property experts report ‘business as usual’ across the market. However, in Sydney and Melbourne, which have been hardest hit by lockdowns this year, the greatest brunt has been felt across retail and office markets.

There is a view across the Raine & Horne Commercial network that the office market will rebound as workplace teams steadily make a return to the formal office environment. The retail market is likely to follow, however the impact of online retailing had been making an impact in this market long before COVID-19. It’s likely that the pre-pandemic trend for retail properties to be used by a greater variety of enterprises – from wellness salons to cafes, will continue longer term.

The buoyancy of industrial property

For anyone who currently owns industrial property, the stars have absolutely aligned, Angus noted. “The growth of online retailing during the pandemic has fuelled demand for warehousing space. This is being coupled with an acute shortage of new industrial subdivisions, and along with demand from owner occupiers, the upshot is that industrial properties are selling fast – often for record prices, and in many areas, we are heading towards an acute shortage of industrial assets.”

For anyone who owns industrial space, it is well worth speaking to your local Raine & Horne Commercial Property expert – you could be surprised at the market value of the asset, and now is a brilliant time to sell. 

Changing the search environment

COVID-19 also changed the way consumers look for commercial property. “Commercial buyers and investors can now take virtual tours or buy at online auctions. The growth of online technologies is great news for yield-chasing commercial property investors looking at regional markets,” Angus concluded.