Central Coast commercial property market review - 2007

By Ty Blanch L.R.E.A.; Principal, LJ Hooker Commercial Central Coast

2007 has been a very interesting year for the Central Coast Commercial markets. It has been proven to be relatively dynamic with quiet periods for some product and excellent take up in other sectors. The State and Federal Elections have definitely impacted on activity and the decision making processes of investors, owner occupiers and tenants alike, however, the level of business confidence has been quite high and we are looking forward to an exciting year with fewer interruptions in 2008.
The industrial sub-sector has been quite buoyant with demand patterns changing in the marketplaces for land, smaller factory units, design and construct leases (where the developer builds to the tenant’s specific requirements) and larger warehouses.
Particularly of interest, industrial land which has been generally slow to move, has experienced some strong sales activity in different areas and for different types of users. Enterprise Estate at Berkeley Vale is a development that has had to be reconfigured due to constraints on the site and council requirements, however all of the smaller blocks that were reissued to the marketplace have been absorbed, in some cases with parties taking much larger lots (and so much more expensive parcels) with an amount of enthusiasm. Interest in the 5 hectare residue parcel has also been encouraging.
Berkeley Vale and North Wyong Industrial
Berkeley Vale Industrial Park and North Wyong Industrial Estate have also been favourites this calendar year with larger companies looking to relocate from Sydney and Newcastle, and locally based operations seeking new premises designed to specific requirements that will cater for anticipated growth. Deals have been made and contracts are in the process of being drawn up for several buildings ranging from 2000m² to 7000m². Primarily these are for larger warehouses and factories with ancillary offices of up to 500m².
North Wyong has become an alternative for many owner –occupiers, investors and end users offering a plethora of different products and ‘land / factory packages’ to suit almost any industrial requirement. The development of the impressive ‘Lifestyle Centre’ opposite the Golf Course combined with extensive new developments in a range of price bands for sale and lease are making the North Wyong district more accessible and appealing to the smaller and larger businesses alike.
Re-sales of strata title factory / showroom units in Charmhaven and Morisset have been steady, although apart from a few new developments in the Bulky Goods sub-sector, new construction has been limited. Land sales at Morisset have occurred but not in the order of previous years.
Warnervale
At Warnervale there have been only a couple of land sales in the ‘F3 Central’ estate adjoining the Freeway but interest has been growing in the last quarter of this year. There are vast tracts of industrial land due to open up at Warnervale in the next few years and the proposed Town Centre is promising to be a welcome addition to the district, pending State Government support and direction.
Tuggerah
Tuggerah and Tuggerah Business Park have been very quiet for land sales up until quite recently. Since August there have been three notable sales with an average price of $160/m² + GST. The stock for new factory / showroom units in the Business Park has been depleted from an over supply in 2005 / 2006 and the leasing activity has also been strong. Prices are stable at about $1200/m² + GST. Interestingly, the highest and best use of the land has now shifted from the industrial units to commercial office space. ‘Zenith’ is an attractive and functional three storey office building with café that is the first of several new commercial complexes nearing completion and this is supporting higher than average rents and values within the area. ‘Park Central’ is about to commence and will deliver 8000m² approx of net lettable area office space in two towers with a licensed restaurant, and Stevens Group are underway with designs for a single storey complex of stand alone luxury offices on Pioneer Avenue that will be available for sale and lease.
West Gosford
The West Gosford area has seen a reasonable flow of factory unit sales which has had the effect of soaking up stock to the point where there are only a handful of new units available for sale and lease. Most recent sales are at an average rate of approx $1300/m² + GST. Some larger and fairly noteable sales have also taken place including the old ‘Belkin’ site in Bowen Crescent and a complex of eight factory units in Dell Road. West Gosford remains a sought after destination for both small and large industrial users.
Inquiry for Somersby had plateaued for the most part in 2007, however the last quarter has seen renewed interest for both land and larger space. Land prices range now from approx $100 to $140/m² + GST for cleared, usable and ‘ready to develop’ sites and factory / warehouse prices average about $900 to $1100/m² + GST subject to age and construction.
Erina, Kincumber
A number of office suites in ‘Platinum’ and ‘Highpoint’ have been sold and leased in Erina throughout the course of the year showing continued demand for high quality office space. Industrial in both Erina and Kincumber are still in demand, and there is good interest for the large bulky goods development nearing completion at 167 The Entrance Road, Erina which will include the new Rivers Concept Store.
Gosford
Development of ‘Baker One’ in Gosford has been a good example of smart refurbishment of office space in the town, resulting in over 5 levels of professional suites starting from $249,000 + GST with leasing rates from $19,900 per annum net + GST. This represents excellent value for money at an affordable level for businesses in Gosford.
There has been an improvement in the Gosford Commercial markets generally with stock tightening up for both office and retail property. In addition, properties have been selling after fewer days on the market and very recently the ‘Carbow Arcade’ has been sold for $2,192,000 (No GST) at Auction, with seven bidders including passive investors from Sydney highlighting the increasing levels of interest and enquiry from Sydney Investors seeking opportunities with higher yields and development potential.
Overview
In conclusion, it has been a very different year to the previous twelve month period for the retail, industrial and commercial office sectors between the Hawkesbury River and Lake Macquarie. Yields have typically moved in line with interest rates and have settled at an average of 8 – 8.5% per annum net. Despite many scattered periods of inactivity, mainly due to the elections and general economic uncertainty, 2007 has set the stage for what should be considered an ideal development and investment climate in 2008.
Ty Blanch can be contacted on 4353 7700 or 0421 645 961

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