The secret is well and truly out when it comes to commercial property investment in Sydney. With values continuing to trend upwards across most asset classes and with investors quick to jump on any opportunities that hit the market, finding an edge in a booming marketplace is an ever-increasing challenge. But cast your eyes west and there are opportunities that investors and developers are yet to tap into, according to GJS Property Director Chris Bailey. Mr Bailey said the Macquarie Park and North Ryde area, 15km west of the CBD, was crying out for more commercial space, with intense demand but not enough buildings to satisfy it.
“Now is the time to start building again," Mr Bailey explained. "Excluding some quality refurbishment projects, there hasn’t been a true new speculative development since probably 2008. “There have been some developments but these have been purely pre-commitment driven. In days gone by, pre-GFC, institutions/developers would build a building on a speculative basis, whereas nowadays they’re very reluctant to do that. However, there’s a real opening in the marketplace for somebody to build and to take advantage of the tightening market conditions," he added.
The squeeze on commercial space in Macquarie Park has been exacerbated by the recent rezoning of large tracts of commercial land around Macquarie Shopping Centre, which are due to be developed into residential apartments. Mr Bailey said the decline in commercial space means the time is now for commercial developers to move in and do more with existing pockets of commercially-zoned properties. "It’s now starting to turn the market in favour of landlords rather than tenants. "As an example, the likes of Olympus and 7-Eleven have relocated out of 82 Waterloo Road (Macquarie Park) but have also wanted to stay as close as they can to the Shopping Centre so they’ve taken space at 97 Waterloo Road, which is the first building that sits out of the rezoned area and is currently being fully refurbished."
Some institutions/developers are already starting to gear up according to Mr Bailey, with Dexus planning a development of a 30,000sqm building at 11 Talavera Road, Macquarie Park.
However, with build timelines of around 18 months to 24 months, there was still a critical shortfall of available properties, he explained. "The most potent demand is from tenants searching for either office space of less than 600sqm or upwards of 2500sqm of contiguous space, which is becoming increasingly hard to come by. “The activity levels are pretty strong in those areas; the sub-500sqm range is active and there’s been a significant decrease in available stock in that size range," Mr Bailey said. “And more importantly is the, activity in the larger contiguous space, circa 2500sqm-plus, where again there’s probably only five options available in the marketplace of that size and above in Macquarie Park and North Ryde.”