Trends in new developments


Docklands1

For the best opportunity for success, new developments need to reflect economic and consumer trends. Here's a look at some key trends in motion today.

From industrial real estate to shopping centres to offices for lease, new developments across Australia are being shaped by economic and consumer trends. We ask property expert Matt Nichols, managing director of Nichols Crowder, for his insights on some of the key development trends in Australia today.

Industrial

The manufacturing industry has steadily declined as a percentage of GDP over the past 50 years as the number the goods made and consumed locally are replaced by imports.

“The number of containers entering Melbourne has more than doubled from 1998 to 2014, which impacts the increasing need for industrial real estate,” says Nichols. “This need takes a variety of forms, with some companies keeping the role in-house and others outsourcing to logistics firms.”

According to CBRE’s Luke Dixon: “The property markets are adapting to this shift, with developers building large-scale, 10,000-square-metre-plus warehouses, in some cases speculatively, near transit and port hubs to capture long-term distribution and transport tenants.”

Nichols adds that industrial sizing starts at 70 square metres (prices from $240,000), with many larger warehousing facilities around 10,000 to 20,000 square metres, which are predominantly leased.

Office

Because Australia is a predominantly white-collar economy, most of the major employment is housed in this sector. Nichols points to the Docklands as the major area for office construction, but says, “After suffering from a GFC hangover, business has adapted well to the economic hiccup.”

He predicts that strata office developments will be increasingly popular, as over 90 per cent of businesses in Australia are small businesses, with an ongoing need for offices for lease.

Retail

While the internet has had a significant impact on retail, Nichols says the big change on the street “will be the domination by the major supermarket groups who consistently target smaller operators in price wars”.

Nichols predicts that we will see more supermarkets in the coming years as retail strips are dominated by franchise groups – pushing mum-and-dad businesses to the side. And with the dominance of baby boomers and their large spending capacity, he says that retailers in wellness, sport, travel and 'big-boy toys' should perform well.

There are many factors at work that affect the types, sizes and locations of developments, including economic changes and consumer requirements. If you’re looking for your next investment, talk to an expert to find the right option for you.


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