Signs point to NSW coast being back in black

It might be the end of summer, but the outlook appears bright for the commercial office market on the New South Wales Far North Coast and in Coffs Harbour, with indications that their markets are on the rise.

That is, at least, according to Herron Todd White’s National Property Clock – Office for March 2016, which saw both regions enjoy a positional change from their recent ‘start of recovery’ label.

The independent property valuation and advisory group says demand and supply of office space in the Coffs Harbour CBD remains stable and there has been a steady take-up of oversupplied space.

“Rental levels are generally static with the most recent lettings effected at similar passing rental rates or subject to CPI increase. There is evidence of leasing incentives (generally two to three months rent free) within the market,” the report says.

“The capital value levels for office buildings demonstrated strong demand and firm yields throughout the year. The principal office precinct is now established in Gordon St, with a small core of purchasers dominating the marketplace and acquiring property at well below established yield levels. ”

For example, The Garden Terrace office complex, located at the nearby Lot 15, 6 Elbow St, is currently on the market and will return a net yield of 7.42%, based on a purchase price of $1.95 million.

Comprising four offices, the property is fully let and secured by three established tenancies, with all leases built with a 3.5% per annum rent increase and review to market at the end of the initial term.

An artist’s impression of the Mervyn Rose Centre. Picture: Supplied.

“The strata office market and in particular smaller units in the lower price range appeared slightly undersupplied. However the market remains price sensitive and there are some proposed office projects awaiting pre-sales and leasing prior to commencing development,” Herron Todd White says in its report.

Among those projects is the 11 strata offices at the Mervyn Rose Centre, which are being offered for sale from $275,000 plus GST, with an average listing price of $373,091 plus GST.

Located at 185-187 Rose Ave, midway between the Coffs CBD and Park Beach Plaza and with exposure to the Pacific Hwy, the proposed suites range in size from about 60sqm to 139sqm.

Evidence for coastal localities would indicate a firming of yields in a stable to slightly stronger market

Meanwhile, Herron Todd White says yields in Lismore, ranging from 8.2% to 10.67% last year, indicate a relatively flat market “with arguably no significant movement in market yields”, while rents appear to be “relatively stable”.

For the wider NSW Far North Coast region, Herron Todd White says yields appear to be firming.

“Evidence for coastal localities would indicate a firming of yields in a stable to slightly stronger market,” the report says.

“Sales in Mullumbimby and Ballina are showing slightly stronger yields of around 7.7% from yields above 8% in 2013.”