More than 300 people tuned in to Ray White Commercial’s March Between the Lines Live webinar, where experts took a deep dive into the Sunshine Coast property market.
This month the host, Ray White head of research Vanessa Rader, was joined by Ray White Commercial Noosa & Sunshine Coast North and Caloundra & Sunshine Coast South director Paul Butler, Ray White Commercial NCG Mooloolaba director Michael Shadforth, and Stockland senior economic development manager Matthew Byrne.
The panel discussed how population increases have impacted employment, putting pressure on industrial, office, and retail assets during a time of rising interest rates, creating some uncertainty surrounding the investment market.
A big advocate for the area, Ms Rader said the Sunshine Coast had seen a lot of growth in terms of population and investment activity, particularly during the COVID-19 period.
She said due to the rapid population growth there had been plenty of movement in the commercial property market as well, with the industrial market taking a front seat.
“Industrial rents have increased dramatically over the last two years, in some instances up to 40-50 per cent,” Mr Butler said.
“The shortage of land and the increased cost of actually building something has increased those rents significantly.
“If you look at a standard development of 45-50 per cent site coverage, your development costs are around $3000 per metre.
“You have to make those sorts of rents to get the margin to do the project, you wouldn’t touch it otherwise.”
Mr Shadforth echoed Mr Butler, saying there was still not a lot of industrial vacancy.
“We have a bit more land in our area of the Sunshine Coast so we’ve still seen construction well and truly underway, but the cost is certainly an inhibitor,” Mr Shadforth said.
“We definitely have a mix of uses still looking for space.
“We have some vacancy as things come out of the ground, but it’s quickly absorbed. Where things would sit still post construction we’re seeing that absorption before completion.
“Rates have increased significantly since 2020”
Mr Shadforth said the Sunshine Coast was a long way behind in the delivery of land supply both for residential requirements and commercial requirements.
“Regional markets have really shifted,” he said.
“People see us as a holiday destination where you can retire and buy an ice-cream shop and service the market they’re living in, but people are now exporting from the regions.
“They’re now a really dynamic place that can go out and compete in the rest of the world.
“So we’re filling spaces where people have moved to the Sunshine Coast and brought their business with them or established a new business, but they’re not competing directly with each other.
“This growth has come because we’re such a great place to live and there’s great education facilities, and suddenly we can’t keep up with that demand and entrepreneurship.”
Ms Rader said office vacancy on the Sunshine Coast is only 4 per cent, one of the lowest in the country.
Mr Shadforth said it was mostly due to businesses who have grown off the back of our construction industry.
“Our professional services since 2015 have doubled and tripled in size, so their requirements have grown due to the fact that the construction industry and infrastructure spend has also grown so much,” he said.
Mr Butler said medical requirements had also played a part.
“We’re not getting any younger on the coast so the requirements for medical space have grown significantly,” he said.
“People also want to work out of A-grade space, they don’t want to work out of a 35 year old building that hasn’t been loved by the landlord.”