The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1350 HERE'S THE 2025 COMMERCIAL REAL ESTATE FORECAST
Join us for an insightful conversation with commercial real estate expert Josh Wapshott as we uncover the unexpected trends shaping the market landscape in 2024 and beyond. Ever wondered how the retail and storage unit sectors are bouncing back with such vigor? Discover why major brands are clamoring for large retail spaces and how storage units on the northern beaches are becoming the go-to for everyone from hobbyists to bustling businesses. We also delve into the booming warehouse market, especially in the prized 750,000 to 1.2 million range, and spotlight Brookvale's industrial real estate as a hidden gem for savvy investors.
As we look ahead to 2025, optimism is on the horizon with potential interest rate cuts fueling a surge in buyer activity. Join us as we dissect the challenges of selling vacant properties versus those with tenants and the strategic shift from large office spaces to more agile, segmented ones. This episode is your guide to understanding the resilience and recovery potential across various commercial real estate categories, offering a compelling glimpse into a vibrant future shaped by smart investments and anticipated fiscal boosts from tax returns. Whether you're a seasoned investor or just curious about the market's evolution, our discussion promises valuable insights and a fresh perspective.
guys, commercial real estate in 2025. Where is it gonna go? Stay tuned, we're gonna talk about it right now. I'm the ringleader, so let's go. So, wrapping up 2024 commercial market with commercial agent Josh Wapshop Buddy, what do you reckon? Where do we go in 2024 and where are we going in 2025?
Speaker 2:Well, mark, I tell you what I'm excited. If the end of 2024 is the beginning of, uh, our 2025, um, it's going to be an exciting one. Um. The amount of transactions we're seeing go through in the commercial space as we head towards the end of the year um is definitely, definitely something enlightening, um in regards to the real estate market and commercial itself. So, um, yeah, we've seen a number of transactions looking very positive so tell me, um what was the vibe for 2024?
Speaker 1:uh, let's break it up in different sections. Um shops retail strip, shops main road.
Speaker 2:Yeah, so look for. For our retail um at the start of the year was probably a a a hill climb from the bottom up um definitely with the, with the recent economy, with interest rates um inflation, whatever it may be, we have seen um our retail businesses struggle, therefore your rents. But I really have seen a change um coming into the end of the year. We've had a lot more bigger premises come off the market, so um, and we had a big place over in chatswood that um mccarvey uh avenue there, remember the warehouse yeah yeah, yeah.
Speaker 2:So that was a big, big one we've had on the had available for some time. Um, then again we've got another one on pit water road, 728 730, just opposite brookie oval. There, um, that's another big lease. We've got available 850 square meter prime real estate right on the main road. Um, even the inquiry level on something like that like yesterday I took through a potential childcare centre looking to get into the market there We've had BCF, we've had Tesla, we've had a number of big brands wanting to have a flagship pole for the northern beaches in that brookie area. So you know, not only inquiries level, but also the inquiry converting into into, you know, a lease premises or a purchased property. So I mean, those are generally the telltale signs. Um, but yeah, inquiries, big things are getting converted. Um, there's no time wasters out there.
Speaker 1:People are quite serious um when they're coming out to look so retail shops up down next, uh, so this year they've been, they've come better um. What about storage? Storage units? Are they um how they fare? How did they fare in 2024?
Speaker 2:I think storage units has been one of the one of the big ones, um, in the northern beaches, just because you have so many different customers. You have people wanting to, you know, work on the cars on the weekend. You have people that travel six months in, you know, six months overseas. They leave half of their stuff in the storage. They might airbnb or, you know, might lease out their property, whatever it may be. You've got tradies, I mean it, even um small businesses operating out of them. We just recently had a? Um a gentleman pick up two storage units over at French's Forest. He started with one after we've gone through the, the tale of the sale and what's involved in the project Purchased or rented. Purchased, yeah, yeah. So purchased um off the plan over at 7 Rodborough Road, french's.
Speaker 1:Forest. They've been faring pretty well this year. What about warehouses like um, the ones like warehouses where you've got sort of 100 metres squared high clearance? How have they gone this year for rent, for sale?
Speaker 2:Yeah, so definitely. I'd say the hottest side is the sales. Anything sort of circa 750 to 120 in your warehouse space flies like hotcakes. There's just a huge buyer pool pool for that as well. You've got generally your people that want to operate businesses out of them um.
Speaker 2:You've got a 50 000 to 1.2 million yeah, they've been that, yeah, they've been the, they've been the hotcakes. Um also like, yeah, you do get the unicorn, where you've got this big open warehouse, probably similar to what we had down on Kenneth down in Manly Vale. Those sort of warehouses too. You've got some big fish that are circling for that type of property. So, again, a very healthy amount of inquiry, and that's only built up steam as we head towards the end of the year.
Speaker 1:So that's what's got me excited. Concrete boxes have done okay. So tell me, what about industrials? So you know, in your Brookvale area, your industrial, your 24-hour industry, how's that stuff rented and sold in 2024?
Speaker 2:Yeah, look again, it has been an uphill. I mean for a lot of it, and we're hearing this from a lot of our contacts within the commercial space Costico and all those companies that released quite a number of reports recently. They're half yearly and then just one last week and they've they've sort of put in their look where we're predicting the bottom. Um, now's the time to pick up your commercial stock. We'll probably start to see some recovery in that space. Um. So, yeah, I think industrial, it's an opportunity to pick up, um, something in five, ten years time that will, uh, something in five, ten years time that will will give you a handsome reward in terms of your investment there. Yeah, industrial, it's really the same story across the board. Some of some have taken a bigger hit than others and I would say that's generally your retail. But, guys, when things take big hits in Sydney's property market, that's an opportunity and an opportunity to enter and create some real equity.
Speaker 1:And Josh, what was the easiest thing to rent this year? The easiest category in commercial.
Speaker 2:So I think, yeah, so basically cut up spaces. So towards the start of the year, middle of the year, basically, you had your big commercial spaces and what we had landlords doing was cut up these spaces, um, basically just to appeal to businesses wanting to reduce their expenditure and overheads, um, so we had a big um office spaces, particularly um, we had a big influx of lease properties go out, um, and and a large amount of inquiry for small office spaces. So we've got a few there. I think a great landlord down the road, on 683 Pitwater Road, has just released four new ones down there. So yeah, we've seen a real good influx of interest in those types. But what I've really seen is I've got that many buyers in in the commercial space for those, those warehouses, from 750 to 1.2, that it's. It's a matter of just trying to find the stock, um, because yeah, there's. So there's always a few buyers left behind what's the hardest stuff?
Speaker 1:what was the hardest credit category to rent beforehand?
Speaker 2:the hardest credit category to rent beforehand. Still, I wanna get focused. I think, yeah, it's probably the hardest. Yeah, the hardest would probably be being, maybe vacant shops for investors, so anything without a lease attached. Generally, a lot of our investors are looking for a tenant that's in there for a couple of years and with an option, probably selling property without that lease attached. That just goes to show that we have a great pool of investors and buyers in our database.
Speaker 2:Probably vacant commercial, probably selling offices as itself, renting very easy, but selling probably, if you compare that to warehouses, probably on the lesser side. And that's generally because we're seeing people that would normally rent those big offices going into smaller ones and cut up spaces, so to speak. So I would probably say that space there. But you know, what they've said is basically due to the hit it's taken. They reckon that this is one of the best recovery rates in the 2025 market. So every time there's a non-performer, well, it's a good place to position yourself so that you're owning that asset while it's performing rather than when it's going the opposite direction. So that would be my take Mark 2025, where do you think it's going to go?
Speaker 2:2025,. Well, I think we're going to hit the ground running. You know, everyone's going to have a nice Christmas nice, nice, good weather and we're going to come back into a hopefully a reduced interest rate market. So I think that's really going to give us a good push into the start of the year. Let's hope that that push sustains itself, heading into sort of your end of financial year where you've got a lot of people tax coming back a bit more free cash. So I'd hope that that interest rate push can push us into that new financial year with some strong results and a strong buyer pool. I mean, there's been a lot of people out of the market. We're sort of seeing that they're coming back in. So let's hope they all come back at once and I think that there is only going to be positive for the commercial real estate market. Josh gosh, thank you very much for the commercial day no, no worries anytime.
Speaker 2:Thank you, I'm the ringleader, so make it up.