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Commercial property in Australia - statistics & facts

Urbanization and population growth are two of the key drivers of Australia’s commercial real estate industry. Commercial property has transformed from simply providing a place for people to work or for people to shop. Increased accessibility, shared coworking spaces, and digital connectivity are just a few trends that have developed within this industry in recent years. Further innovation in the sector will be required to maintain steady growth, particularly with a challenging environment for many segments on the horizon. The value of commercial building activity in Australia was already forecast to decline, even before the coronavirus pandemic hit the nation.

What are the key segments of the commercial real estate industry?

Prime office real estate in Melbourne and Sydney has seen high rents and low vacancy rates over the years. The yield of prime office CBD real estate was highest in Western Australia and lowest in New South Wales. 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. 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 fully utilized.

In the retail space, changing consumer habits are impacting brick-and-mortar retailers and shopping centers. In 2017, 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 forecast to continue to increase. Along with this, shopping habits and behaviors following the coronavirus pandemic will also influence how and where consumers will purchase their goods. This may result in increasing vacancies in the retail sector in the short term.

The industrial sector looks likely to experience growth in the coming years. In a recent survey, property professionals expected the industrial capital values to increase in the next year. Growth in this segment is closely related to the increasing demand for warehouse space from online retailers and e-commerce platforms. Mega warehouses, automated facilities, and logistics hubs are needed to expand Australia’s e-commerce fulfillment capabilities. Online retail giant Amazon along with grocery chains Coles and Woolworths are just a few of the names that are looking to occupy more industrial space. DHL and Australia Post are also increasing their postal and delivery facility occupancy.

The impact of the COVID-19 pandemic

Australia’s commercial real estate industry has taken a hit due to the COVID-19 outbreak in the country. The way Australians work and shop may reshape the office and brick-and-mortar segments drastically. Many white-collar businesses have had to increase their flexibility regarding working from home arrangements. The demand for office spaces with both short-term and long-term contracts has shifted, with many business owners unwilling to commit to paying for space they will not be able to use should social distancing restriction rearise. In the retail sector, online buying has become the new normal for many in the country, with mandatory store closures turning more people towards online retail shopping. This in turn has led to increased supply in the industrial real estate segment for e-commerce retailers and delivery services, with growth expected to continue in the near future.

Interesting statistics

In the following 4 chapters, you will quickly find the 27 most important statistics relating to "Commercial property in Australia".

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