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Tweed commercial market continues to excite

A ROBUST growing population that is well supported by investment into new infrastructure projects has resulted in a pickup in commercial property development in Tweed, according to Ray White’s latest Between the Lines** report.

“This combined with record lows in interest rates has seen enquiry levels elevated by out of town buyers looking to capitalise on the sound fundamentals of the region and attractive investment yields,” said Ray White Head of Research Vanessa Rader.

“The Tweed region is an established commercial market that offers a mix of industrial product, retail both in showroom assets and strip retail, as well as office accommodation.

“This has historically been a very locally driven market with a high volume of sales transacting to local investors, developers and a growing number of small businesses looking for owner occupation.”

Ray White Commercial (GC South) Sales and Leasing Specialists Darren Jones and Aaron Neylan said the Tweed region continued to excite.

“Tweed has a vibrant growing population and strong tourism trade all aiding in local business and investment into the Shire,” Mr Jones said.

“While traditional private investors have actively invested into the local economy, State investment into infrastructure has spurred on buyers from further afield looking to take advantage of competitive yields in this improving economy,” Mr Neylan said.

Mr Jones said across the Tweed region the industrial market continued to be the most active of them all.

“The high level of smaller industrial holdings including industrial units has dominated sales activity over the past 12 months, representing $41.453M during the 2018/2019 period, up 28.59 per cent on the prior financial year,” he said.

“These smaller assets with an average price of $943,000 are well suited to the smaller local investor keen to capitalise on low interest rates and yields averaging sub 6.75 per cent.

“Retail assets continue to regularly trade but smaller strip retail assets are becoming increasingly more difficult to keep occupied with food and service-related tenancies most active in the current market.

“Larger showroom retailing continues to be in hot demand with household retail trading continuing to be active, keeping yields within the 5.5 per cent to 7.5 per cent range.”

Mr Neylan said the industrial market was the greatest space-user across the Tweed region and the range of stock was wide with a mixture of older-style factory warehouses and smaller, modern industrial unit complexes which offered a mix of office and retail uses.

“Current net face rents for industrial stock average $125psqm, but they can range from as low as $70psqm up to $170psqm depending on its size, quality and access,” he said.

“Given the continued growth in this segment of the market, there has been limited scope for growth in the overall average, however new assets regularly push the upper rental limits.

“Properties which offer a greater office component or more traditional commercial office space have shown stable rents over the last 12 months, currently averaging $208psqm, but these can range closer to $300psqm for quality stock.

“The retail market has gone through a lot of change over the past few years, the change from more traditional retail uses, growth in vacancies in some locations and the growth in showroom stock has seen an average range of $259psqm.”

Recent sales:
Address – 28 Greenway Drive in Tweed Heads South
Sale Price – $2,075M
NLA – 195sq m*
Building rate psqm – $7,928*
Yield – seven percent
Purchaser – interstate investor

Address – 51 Tweed Coast Road in Cabarita(pictured above)
Sale Price – 2.75M
NLA – 606sq m*
Building rate psqm – 4,537*
Yield – 6.68 per cent
Purchaser – local investor.

*Approximately.
**Ray White Between The Lines Commercial Property Overview – Tweed Region – October 2019.

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