REA Insights Commercial Property Snapshot, September 2020

Despite a difficult economic environment and ongoing health crisis, demand for commercial property remains resilient, with strong year-on-year growth in search volumes and views per listing.

The ‘Buy’ section of realcommercial.com.au even saw a record number of searches in August, pointing to keen interest from potential purchasers.

The notable exception in August was, unsurprisingly, Victoria, with search volumes to buy and lease falling significantly during lockdown.

In this month’s commercial snapshot we continue to track search volumes over time and demand by category. We also provide a view of user behaviour by analysing the most-searched keywords per asset class as well as looking at the most popular commercial properties for the month.  

How are search volumes tracking?

There are four key highlights from the search data in August:

1. The realcommercial.com.au ‘Buy’ section saw a record number of searches nationally

As well as the national high, search volumes in New South Wales, Queensland, Western Australia, South Australia and Northern Territory reached their highest point in two and a half years.

2. Both buy and lease saw substantial year-on-year growth

Queensland was a standout, with ‘for sale’ searches up by 17 per cent and lease searches up 18 per cent. South Australia was also strong, with a significant 38 per cent year-on-year increase. Search activity in Western Australia also warrants a mention, with buy and lease searches up 22 per cent and 20 per cent respectively.  

3. Victoria’s lockdown impacted lease more than buy

In August, searches to buy commercial property in Victoria declined by 6 per cent compared to the previous month. But compared to the August last year ‘for sale’ searches were 3 per cent higher. Searches to lease, however, were more substantially impacted by the lockdown, recording an 18 per cent drop month-on-month and a 11 per cent drop year-on-year. 

4. Some asset classes are faring better than others

The prolonged effects of COVID-19 reinforced the strength of some asset classes during the pandemic, while also highlighting the susceptibility of others during the same period. This is seen in the clear divergence of the fastest growing and fastest declining asset classes in the graph above.  

Commercial farming is a hot commercial topic and given its large presence in Victoria, so it is encouraging to see its growth continue despite the lockdown. Warehouses have also recorded increased demand in recent months. In contrast, searches for offices have continued to decline in August and now down 6 per cent on last year.

What are people and businesses looking to buy?

Demand for almost all asset classes increased in August compared to July. On average, views per listing increased by 15 per cent year-on-year across all ‘Buy’ categories.

It’s interesting to note that views per listing for asset classes that were initially heavily affected by COVID-19 remain substantially higher than they were a year ago. The hotel/leisure asset class for example saw a 31 per cent growth in views per listing. Similarly, offices recorded a 17 year-on-year increase as professionals slowly return to the workplace. This could also reflect the level of supply currently available.

While Victoria has attracted high demand for its commercial farms in the past, we’re also now witnessing a demand surge in Western Australia where listings in this category grew substantially in August.

The retail sector is the only asset class which has not attracted as much demand compared to a year ago. The drop in this category is predominately driven by Victoria where views per listing are down 40 per cent year-on-year – not at all surprising given the state of lockdown.

What are people and businesses looking to lease?

Despite the slight month-on-month drop in lease searches in August, views per listing is up both year-on-year and month-on-month.  

In August, views per listing for land and development sites increased by 20 per cent compared to July and are up 36 per cent year-on-year. 

This was mainly attributed to growing interest in the South Australian market for that specific asset class. This could be associated with the residential rental housing shortage in Adelaide. It’s interesting to note that the third most searched keyword for land/development in the past six months is ‘residential’, suggesting that developers are seeing opportunities to take advantage of this shortage.

Views per listing for offices remained stable month-on-month, although they remain 13 per cent higher year-on-year.

While this asset class recorded a sizeable year-on-year decrease in Victoria, demand for offices in all other states has grown, with Western Australia and Queensland recording year-on-year growth of 46 per cent and 33 per cent respectively.  

Consistent with last month’s result, demand for leasable warehouses in Canberra is up  150 per cent year-on-year. Nationally, the category has seen year-on-year growth of 35 per cent with positive increases across all states.  

What are some features that people and businesses are looking for?  

Above we look at the most-used keywords for commercial property seekers over the past six months.

Interestingly, warehouses are not just an in-demand asset class, the word ‘warehouse’ is also the fourth most-used keyword by those searching for offices. 

The importance of a commercial property having a Class 9B compliance – and hence permissible to be used as an assembly hall for various purposes – is also showing an upward trend, with ‘9B’ being the second most searched keyword for office listings. The keyword also features on the top 10 keyword list for medical/consulting listings.  

What have been the most popular commercial listings? 

See the top 10 most viewed commercial listings nationally and in each state below.  

A Westpac branch in Rocklea, Queensland was the most-viewed commercial listing on realcommercial.com.au in August 2020.