‘Proving Extremely Resilient’: The Regional Market Rises
In Victoria, Shaun Venables, partner in commercial agency Burgess Rawson, agrees the regions are going remarkably well. In one of their major auctions recently, offices in Nathalia, in northern Victoria, were bought for $1.583 million on a 6.32 per cent yield, with a $100,000 rental.
“We’re selling quite a lot of office space in regional areas,” says Venables. “The majority have strong leases from the state, federal or local governments, or they might be the local arm of a national firm.
“We’ve always done quite a lot of work in Shepparton and Warrnambool, Sale and Bairnsdale, and a lot of major centres like Geelong, Bendigo and Ballarat. Beyond those, commercial property in South Australia has the advantage of attracting no stamp duty and there’s a big demand there for office space, as well as in Western Australia.”
The regional office market is performing particularly strongly in NSW, too, says Burgess Rawson partner Yosh Mendis. “It’s going exceptionally well. A lot of the regional offices are underpinned by secure tenants, like medical or government tenants or government-supported tenants.”
Commercial property specialist Scott O’Neill of Rethink Investing, and co-author of the guide Rethink Property Investing, says the regional office market proved much stronger during COVID, and after it, than most capital city markets.
“The regional market was much more stable and wasn’t affected by the kind of lockdowns that hit Sydney and Melbourne,” he says. “In the regions, it tends to be more boutique offices for accountants, lawyers and mortgage brokers and vacancy rates didn’t rise at all.”