Top commuter towns serve up commercial opportunities
A record number of Australians have moved from capital cities to regional areas, so what has the impact been on commercial property in these areas? Janet Bond looks at three key commuter towns on the eastern seaboard, to see how agents and highly-engaged residential buyers are shaking up regional commercial markets.
The residential property boom in regional towns is having a flow-on effect to commercial property markets with areas in demand with homebuyers offering savvy investors promising commercial opportunities.
A net 43,000 Australians moved to regional areas from capital cities in 2020, the largest net internal migration gain for the regions since the Australian Bureau of Statistics began keeping track of these figures in 2001. The record exodus of people from cities to regional areas during COVID has continued in 2021.
The industrial, retail and residential development sectors in outer suburbs and regional areas are all benefitting from increases in regional populations, according to REA Group economist Anne Flaherty.
“We have had such strong property price growth in regional areas still within commuter distance of CBDs that developers and commercial investors are thinking ahead,” Ms Flaherty said.
“Prices don’t suddenly shift direction, so some of the momentum that we have seen with price growth in these areas is likely to continue to the end of the year at least.”
Most in-demand commuter areas on east coast
New analysis of REA Group data shows the most in-demand commuter suburbs on Australia’s eastern seaboard were North Gosford in NSW, Rye in Victoria and Surfers Paradise in Queensland.
Each commuter hotspot shows demand for commercial property in regional areas is being driven by completely different factors, from the creation of a regional medical hub to those looking north to escape the worst of the pandemic.
The analysis looked at the most in-demand areas with highly-engaged buyers on realestate.com.au that were located within a 90-minute commute to Melbourne, Sydney and Brisbane. The data set covered highly-engaged buyer activity on site for the 12 months to the end of June 2021.
A highly-engaged buyer is defined as someone who is likely to be close to making a purchase, based on their activity on the site. High-intent activity includes returning to a listing multiple times, looking at floorplans, emailing or calling the agents and scheduling an appointment.
North Gosford, NSW: Medical hub
Gosford medical schools will create demand for commercial properties like this DA-approved studio apartment complex. Picture: realcommercial.com.au/for-sale
Multimillion-dollar medical hubs are driving hundreds of students, doctors and nurses to the NSW central coast city of Gosford. They are also firing up new commercial property opportunities.
According to the REA Group data, 405,817 highly-engaged buyers viewed properties in North Gosford in the year to June 2021 – the most buyers for any commuter suburb or town in NSW.
The $72.5 million University of Newcastle Central Coast Clinical School and Research Institute welcomed the first of its expected 900 medical and nursing students late last month.
This followed the approval of the $172 million Northside Private Hospital in May and the recently completed $348 million expansion of the public Gosford Hospital.
Raine and Horne Gosford senior sales consultant David Nichols is managing the sale of a DA-approved studio apartment complex at 222 Henry Parry Drive, North Gosford – on the doorstep of the suburb’s expanding private hospital.
“Gosford will be at the forefront of medical training in Australia,” he said. “With the big training school now open, there will be demand for bedsitters, or small units for doctors and nurses working night shift. They don’t need 400sqm internal, they just need somewhere to camp and catch up after their excessive shift work.”
Commercial and residential property in Gosford would get a further boost when the region’s second private hospital was built in West Gosford, Mr Nichols said.
“Let’s face it, with the NBN, the new NorthConnex, the tunnel and the proximity of Gosford to Hornsby and even Wahroonga, Gosford is increasingly attractive to commuters and professional businesses,” he said.
Andrew Dunn, commercial sales and leasing executive with Di Jones, is managing the sale of medical suites in Jarrett Street, North Gosford, a two-minute walk from the private hospital.
The four suites range from 115.4sqm to 126.6sqm. He said interest in the suites was coming from existing tenants and people interested in providing short-term leases for medical specialists.
Mr Dunn described the health of the region’s commercial property market as variable. “Office is cactus, industrial is usually strong and retail is fairly strong – it was weak when COVID-19 hit last year, but it has bounced back really quickly.”
Industrial assets in the region were in high demand, he said, citing: 25 units in West Gosford selling off the plan in less than 12 months; the new Lisarow Enterprise Centre of 74 units and warehouses selling out; and The Sawmill, a $6 million commercial and industrial project in nearby Erina, where 120 industrial units have all been reserved.
Surfers Paradise, QLD: COVID-19 boost
Areas that have experienced few pandemic-related shutdowns like Surfers Paradise are attractive to commercial property investors. Picture: Getty
COVID-19 has delivered a boost like no other to the Gold Coast commercial property market. As people fled capital cities for a coastal lifestyle largely uninhibited by lockdowns and the pandemic, commercial and residential property activity surged, said CBRE’s Gold Coast managing director Mark Witheriff.
“Vacancy rates are falling across the city because quite frankly, we’ve been fortunate to be open for business and the Gold Coast, being a strong SME market, just keeps attracting people wanting to get away from higher density living in capital cities,” said the 30-year veteran of the region’s commercial property market.
REA Group data shows 609,382 highly-engaged buyers viewed properties in Surfers Paradise in the 2020/21 year – the highest number of any Queensland commuter region. The coastal suburb, 50 minutes from Brisbane, has attracted some major development projects in the past 12 months.
In February, high-profile developer Tim Gurner announced plans for a $600 million development on a 1.3ha site overlooking Budds Beach. It will have 600 apartments, a hotel and resort facilities.
In May, apartment king Harry Triguboff revealed he had spent $75 million on an oceanfront site at the northern end of The Esplanade. Mr Triguboff is also building the 76-floor Ocean Tower on the Esplanade.
“I’m Surfers’ biggest fan,” he told the Gold Coast Bulletin. “I love walking on the beach and I lap up the buzz.
“Surfers is entering a new era on the back of COVID, with more and more Australians appreciating it,” he said.
“I’m not the only developer awake to what’s happening [in Surfers] – two whole city blocks, back from The Esplanade, have sold or been joint-ventured.”
One of those joint ventures is the SPG and Gordon Corp plan for a $800 million residential resort development in the heart of Surfers Paradise. The proposed three-stage development includes a ground-level retail and dining plaza, open public spaces and three residential towers on the 1.15ha site bordered by Ferny Avenue, Surfers Paradise Boulevard, Pandanus Avenue and Ocean Avenue.
Mr Witheriff sums up the heady level of development as “the renewal of Surfers Paradise”.
“All the way from Broadbeach to Surfers there’s a strong wave of redevelopment and a repositioning of wealth to beachside Surfers,” he explained.
“Previously the [Gold] Coast has always been a speculative marketplace. The change now is that people are coming here to live, rather than buying here in the hopes of values lifting or buying to rent.
“The other key is that our population is circa 600,000, so when you get to that level, there’s a degree of maturity in the city. The market is not going to fluctuate as much and the level of infrastructure that was developed in the lead up to the Commonwealth Games and now in the lead up to the Olympics, has provided a really strong base to the Gold Coast.”
Rye, Victoria: Bumpy recovery
A quiet coastal town 95km south of Melbourne’s CBD, Rye has long remained in the shadow of its neighbouring stars Portsea and Sorrento.
But in the last year, COVID-19 has driven thousands of city-based buyers to consider Rye as permanent coastal home, rather than holiday destination.
REA Group data shows 488,082 highly-engaged buyers viewed properties in Rye in the year to June 2021 – the highest number of any commuter towns or suburbs in the state.
Amid rising demand for residential property in the town, agent Max Prentice is selling what he said is “arguably the last major untouched landholding on the southern Mornington Peninsula”.
“It’s a thumping site – one of the best sites I’ve seen for 48 years,” he told realcommercial.com.au.
Known as Bimblehurst, the 1.01ha residentially zoned site at 2519 Point Nepean Road, is opposite Bay Beach and 500 metres from Rye’s centre. It has been held by the same family for more than 100 years and its sale is expected to be hotly contested.
Bimblehurst on Point Nepean Road could be subdivided. Picture: realcommercial.com.au/for-sale
Mr Prentice said he had received interest from a buyer wanting to retain the property as an oasis and another offer that would see it subdivided into four to six lots. Acknowledging its potential for residential development, he said as yet, no-one had been to council to get DA approval.
Jeanne Anderson lives in Rye and as a property agent with Jellis Craig has a freehold space in Dundas Street, minutes from Rye’s back beach, for sale.
She is quick to point out that the shop, which has a price range of $780,000 to $825,000, is not among the long, linear strip on Point Nepean Road.
“It’s in an extremely popular, tight-held group of shops on Dundas Street, the only commercially-zoned patch for quite a few kilometres in that back beach areas,” she explained.
The Rye retail strip has been plagued for years by vacancy rates. But the $6.5 million first stage of the Mornington Peninsula Township Plan for Rye aims to rejuvenate the foreshore and town centre.
Ms Anderson, who has had a stint on the Rye Chamber of Commerce, applauds the council’s effort to make the Rye foreshore and shopping strip “busier and more popular”.
“The aim of the Napier Street Plaza expansion and the foreshore redevelopment is more about Rye becoming a destination and to attract more retailers and more commercially-minded businesses,” she said.
“Investors should look at the types of shops we need here – for example, fresh produce and butchers? There’s nothing like that in Rye. We have lots of cafes and hairdressers, so anything outside the box would be nice.”
Matthew French from Cameron real estate has had the retail and office development The Pinnacle at 2217 Point Nepean Road in Rye on the market for two years.
Promoted as a sophisticated foreshore development with stunning views and the exposure afforded by 16,000 cars passing it every day, a sale or lease agreement has yet to be completed.
Mr French said in contrast to the tough retail conditions, demand for small industrial properties in Rye was hot.
“Warehousing – 170 to 250sqm, with a small office at the front – that is the flavour of the month,” he told realcommercial.com.au.
Mr French said demand was driven by small business – people moving to the area and seeking storage or starting up a business.
“There’s a lot of demand for toy storage too – cars, boats, jet skis – as people’s homes are getting smaller and they don’t have enough storage.
“We’ve had a fair amount of interest from investors, which hasn’t always been the case because there’s a good chance of them getting tenants now.”
