Suburban Business Boom
16 October 2017
| Category - Market Updates

Suburban Business Boom

A suburban business boom is coming and savvy commercial property investors are already seeing the dividends.

A Suburban Business Centre Review commissioned by a new industry advocacy group, The Suburban Alliance found that industry and employment in South East Queensland was already highly suburbanised and the majority of new business and jobs growth was likely to occur in suburban locations in the future.

Steve de Nys, Director of Stronghold Investments said the existing strength and future predictions for business suburbanisation outlined in the report was good news for commercial property investors.

“Naturally if business growth is occurring in the suburbs, there will be an increasing demand for quality commercial properties to rent.

“We are already seeing the demand for quality suburban business locations translate into good returns for investors. Our Westlink Green Property Trust No.1 located in a suburban business centre at Darra is delivering 11% pa returns to investors.”

Mr de Nys said the Suburban Business Centre Review prepared by economists Macroplan with support from Colliers, was further evidence of just how important suburban locations would be for commercial investors in the future.

The report identifies 26 Suburban business districts outside of Brisbane’s CBD that hold 33.2% of all South East Queensland jobs as well as being home to 3,389 out of 10,877 new businesses registered in the 2012-2016 period.

“The Suburban Business Centre Review also found that the fastest growing industries in the future are currently most inclined to prefer suburban locations,” Steve said.

“The report concluded that a rapid growth predicted in the health care and social assistance, technology and science, and education and training sectors will result in significant business and jobs growth in suburban areas and that “amenity” would determine where these new businesses operate from.”

The report highlighted the key drivers in tenant demand and suburban business park popularity as;

  • Location is a driving factor due to accessibility to markets, labour, design and construction options as well as workforce consolidation and company growth flexibility.
  • Affordability in comparison to CBD and metro office markets.
  • Car park availability and accessibility to major road networks
  • As employee demand for easily accessible amenities grows, businesses are looking to lease A-grade premises that include facilities such as technology services, retail, food and beverage options and child care services.
  • IT, technology, health, medical and national brand electrical equipment companies were the most represented tenant type amongst the business parks studied and were drawn to the design and construction options for their specialist fields.

Stronghold’s co-investor and building partner, the Graystone Group specialise in developing business parks and have built more than 20 new A-grade assets in suburban areas in the past decade.  Stronghold have eight of those assets under management, returning between 8-11% per annum to investors.

Investor and commercial electrical contractor Emanuel Baveas said he was already seeing anecdotal evidence of a commercial property boom.

“I’m seeing some developers and other people I do work for completely move away from residential property and into commercial. These are companies that have traditionally done residential property development for the last 5-6 years.

“I think the residential and the unit market has been coming off the boil. The company that we’ve been working for in big unit developments is pulling away from residential completely and investing into office type investments.”

To read more about South East Queensland’s suburban business centre boom access the full report here.