Commercial property in Newcastle improving: HTW
Commercial property markets in the Newcastle and Hunter region have improved, however the market is suffering in the mining sectors of the region.
Valuation firm Herron Todd White suggests that the industrial market is relatively robust in strong and well sought after locations such as Beresfield and Thornton.
"While there is certainly downward pressure on market vales, we haven’t really seen solid market evidence of capital value decreases.
"Current rents have reduced slightly from the soft peak of two to three years ago," the report says.
The HTW month in review suggests however the market is suffering significantly north of Hunter Valley where mining takes over from Newcastle's city and port.
"We’ve noted hard evidence during the year of both capital and rental value diminution in the Rutherford market where activity has been very limited.
"Further up the valley to areas even more heavily mining sector reliant such as Singleton (McDougalls Hill) and Mount Thorley, local agents indicate that buyer enquiry is essentially at a standstill," the report says
Herron Todd White said that they are aware of numerous indiustrial properties built in the last five years that the occupier has had to vacate.
"One of these properties has been on the market for sale and lease since construction in 2011 with only minor subleasing of office components occurring," says the November review.
Despite the negative figures posted north of Hunter the selling activity in small start titled industrial units closer to Newcastle remains relatively strong, with the sales activity being dominated by owner occupiers generally buying the property through superannuation funds, the report indicates.
"This trend remains unchanged throughout the year and has intensified marginally given the potential tax savings available under this scenario.
"The industrial market in 2015 has most definitely been affected by reductions in mining sector activity and spending cutbacks which directly influences the requirement for mining services companies in the Hunter Valley.
"We expect this trend to continue in 2016 and if mortgage stress takes hold with any increase in interest rates, the potential for further value reductions in the Hunter Valley is high."
