Commercial investing is not without its risks. One of the most obvious is consistent vacancies. This is the last position a commercial investor wants to find themselves in, as a sudden downward trend can make it hard to rise back up. The building will deteriorate as it lays vacant, and new properties may be erected in the surrounding areas.
Unfortunately, vacancy rates are increasing in the Gold Coast. A fall in demand means fewer tenants, after all. According to the latest Property Council of Australia Office Market Report, vacancy levels in the area rose from 11.6% to 12.9% because of reduced demand.
“While Gold Coast’s vacancy rate has been largely stable over recent years, the fall in office demand over the first six months of this year should be a cause for concern,” said Chris Mountford, Queensland Executive Director of the Property Council of Australia. “While we are a long way from the 20+ per cent vacancy experienced on the Gold Coast in the first half of this decade, any increase in vacancy is unwelcome news of the city’s economy.”
Spaces of all grades are suffering double-digit vacancies. The only ones not as affected as the rest were B grade locations. That said, the positive demand for such buildings wasn’t enough to bring their vacancies into the single digits. Rather, vacancies fell from 11% to 10.7%.
Still, this bit of growth can guide investors on their next moves and help them predict how the market will change in the near future. This decrease in vacancies suggests that top- and lower-tier properties are currently undesirable, but mid-tier buildings that are a bit higher end are in demand. Investors can expect that luxury-style buildings will be tough to rent. Their lower-end counterparts will be similarly difficult, but it shouldn’t be too hard to find tenants for a building that has a modest amount of amenities
According to research from global consulting agency Knight Frank, demand in the Gold Coast is coming primarily from local businesses, but larger corporations with branches or head offices in the area are growing increasingly interested. With this interest comes new jobs – the Gold Coast unemployment rate is well below Queensland’s at 4.3%. It’s highly likely that these businesses are interested in quality yet affordable office spaces for their employees.
Contact Ray White for more information on commercial property investment in your area.