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Market Wrap

What’s happening in the commercial property sector?

How the commercial property sector differs from residential

Within commercial the three key sectors can be broken down to retail, office and industrial. Out of the three, office has been outperforming the rest. “Vacancy rates in Melbourne are at an all-time low in office buildings,” shares hockingstuart’s Commercial Director Charles Carty, “This offers increased value for this particular investment and brings a certain level of safety within the market, which could appeal to new investors.”

The commercial property sector operates within its own set of rules. Although it is not entirely immune to the forces shaping the rest of the property market, there are some factors to consider. 

Factors contributing to the sector

Part of the reason for low vacancy rates in office buildings can be attributed to Australia’s low unemployment rate. Figures released in May show unemployment sitting at 5.2 per cent, which is 0.3 per cent higher than where it was in February, but still much lower than when it hit its 11.2 per cent peak in 1992. With ongoing job prosperity and a focus from the Federal Government on keeping unemployment rates down, employers are being buoyed to continue growing and expanding. As such, office space is under increasing demand and for this reason is able to offer investors a more secure option to consider.

“The commercial sector, and office buildings in particular, have not been hit to the same degree as the residential market – commercial investments with stable long term tenants continue to sell well,” adds Charles.

For advice on commercial property, reach out to the experts at hockingstuart Commercial today.

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