What are the key segments of the commercial real estate industry?In the retail space, changing consumer habits are impacting bricks-and-mortar retailers and shopping centers. Apparel retailers held the biggest occupancy share of sub-regional shopping centers. However, more and more consumers seem to be migrating to online shopping with the Australian retail e-commerce market share forecasted to continue to increase. Along with this, current pandemic worries are also influencing how and where consumers are purchasing their goods. This will likely result in increasing vacancies in the retail sector in the short term.
Prime office real estate in Melbourne and Sydney have seen high rents and low vacancy rates over the years. With an expected increase in supply from 2020, rents may begin to stabilize. Accordingly, office yields in cities were expected to remain relatively stable in the same period. While investment in office property has been steady, interest in flexible working spaces has been uncertain, largely due to the impact of the coronavirus pandemic. These coworking spaces are usually rented out on a short-term basis, and this may be appealing to companies who do not want to be locked into a long-term contract for an office space that might not be accessible under social distancing restrictions.