Diversity shores up Rocky's office market in 2016
ROCKHAMPTON's celebrated diversity has again fortified the city's commercial office market while other towns across Central Queensland have floundered in the challenging conditions.
Property valuers Herron Todd White gave the Rockhampton market a robust assessment in its year in review report, saying 2016 was "fairly stable” with steady sales volumes and generally stable rentals.
"We have seen increased local and non-local investor activity throughout 2016 compared to previous years, with investors attracted to properties with strong income profiles, solid tenants and appropriate unexpired lease terms or weighted average lease expiries (WALE),” the report says.
"Overall the year has shown the strength of Rockhampton as a regional market, given its ability to maintain a stable market while market conditions in surrounding Central Queensland towns have deteriorated.”
"This is a result of the diverse economy of Rockhampton, which includes government, education, resources and agriculture industries.”
The most significant office sale for the 2016 period was the NAB building at 39 East Street, which went for $9.375 million in June at an "analysed market yield of 8.43%”
An example of the plight of neighbouring centres was in Gladstone where the office sector continued to soften in 2016 with very little activity on the sales and leasing front and some major declines in prices.
"Some new known rentals negotiated during 2016 showed reductions up to about 50% from rentals achieved in peak market conditions, with incentives such as rent free periods and fit out allowances common as part of new negotiations,” the HTW report said.
"Older stock has become increasingly difficult to lease and it may take some time for the available space to be re-absorbed.”
A bright spot was an "arms length transaction” of a strata office unit in the Gladstone CBD as a leaseback sale to the vendor with a five-year lease term.
The sale price of $490,000 reflected an impressive analysed market yield of 9%.
"We are advised the sale was to a non-local investor, indicating that investors remain active in the Gladstone market, however they are very particular about their purchases and are sensitive to tenant strength and lease terms.”