After the huge interest in industrial assets in recent years, the trend is now starting to normalise with sales of office assets overtaking industrial.
Ray White Commercial Head of Research Vanessa Rader said office assets accounted for 27.7 per cent of all commercial sales in the past 12 months, up from a quarter in the prior year.
“We have seen office regain its number one position as the most transacted commercial asset in the country,” Ms Rader said.
Industrial assets accounted for 23.5 per cent of all commercial transactions last financial year, followed by retail at 17.1 per cent, alternatives at 12.8 per cent and development sites at 9.3 per cent.
She said other trends include a movement back to traditional east coast markets after the lure of affordable and higher yielding opportunities in smaller markets dissipated, along with inexperienced buyers.
This uncertainty surrounding financing has caused both vendors and prospective purchasers to be more considered with their next steps, resulting in a decline in activity and reducing listing levels across the country.
Ms Rader said the proportion of industrial investment was down to 23.5 per cent this year, from 27.7 per cent in 2021/22.
“This market continues to see some of the best returning assets at the moment given the mismatch in demand and supply,” she said.
“Occupier demand has remained strong, notably for larger distribution/logistic users however limited new supply and land constraints have kept vacancies limited and rental growth positive.
“Despite the growing cost of finance, demand for these properties continues to grow, however with yield movement upward, owners are slow to bring assets to market.”
According to Ms Rader, one of the biggest movers this year has been in the alternative space.
“While volumes peaked for assets such as service stations in 2020, continued demand by a range of buyers across a variety of uses has grown,” she said.
“Childcare continues to break new ground given the fundamentals of population growth and government subsidies aiding in keeping occupancy elevated.”
Ms Rader said healthcare and medical assets had also risen in popularity with offerings on medical suites and centres, through to private hospitals and integrated facilities providing a “one-stop-shop” for all medical needs.
“This year this combined asset class represented 12.8 per cent of all sales after recording just 6.8 per cent last year,” she said.
Ms Rader said retail has also fallen this year from 22.6 per cent to 17.1 per cent.
“These results were heavily influenced by a number of larger regional transactions occurring last year,” she said.
“We have, however, seen continued demand over the last 12 months for smaller neighbourhood or convenience-based retailing from a range of buyers, while investment into strips has slowed.”
She said development site activity had also grown this last year, after a number of quiet years, due to lockdowns, disruption to building sites, and the excessive increases in construction costs, resulting in investment into developments of all types falling.
“This year we have seen some movement in particular for sites where vacancy levels continue to be low, such as residential and industrial, however, the difficulty with planning and cost of construction remains an influencing factor,” she said.