WHAT DOES A $ 2 MILLION COMMERCIAL INVESTMENT LOOK LIKE ?
Over the past 18 months we ’ ve seen a substantial uptick in private investors and owner-occupiers converge on commercial markets looking to diversify their investment portfolio . Low interest rates , availability of funds due to emerging new lenders and sky-rocketing residential prices are all prompting savvy investors to pivot towards commercial assets . While some markets have been impacted by COVID-19 , such as office space and retail , this hasn ’ t dampened demand to buy , with many seeing the pandemic as a small blip in the investment cycle . Assets like industrial property have been hotly contested given its strong performance , while other assets like childcare , fast food , medical , and service stations remain fan favourites .
With this increase in demand for these assets , many investors are quickly being priced out of the market , with new lows in investment yields keeping capital values elevated . However $ 2 million can still buy you a quality commercial asset across the country . Here are a few examples of where to look at next .
Sydney CBD Strata Office - This asset has had a long history of stagnation , but over the last five years there ’ s been strong capital value growth which hasn ’ t wavered during COVID-19 . Despite vacancy levels being elevated across the broader Sydney CBD office market , we ’ ve seen good demand at the higher end of the market by both offshore and domestic investor groups , funds , and trusts that highlight the long-term strength of these assets .
Across strata , both investors and owner occupiers have been eagerly competing for the limited assets available . Current average capital values stand at a little more than $ 14,000 / sqm , and the average sale price is just over $ 2.1million . A 150sqm office suite in Australia ’ s premier office market is affordable within a $ 2 million price range .
Perth Industrial - Industrial assets have been the standout performer during COVID-19 with significantly increased demand for logistics and warehouse space , while small business growth has also resulted in industrial vacancy levels being low across all states .
Over the past few years we ’ ve seen Perth industrial assets grow in popularity with local buyers . However , more recently , the strength in the state ’ s economy has resulted in interstate buyers converging on the various Perth commercial markets . Perth ( and most other states ) continues to offer quality industrial assets at a range of prices , from smaller industrial warehouse units in the $ 500,000 and under price range , up to multimillion dollar distribution facilities . The quality and location of assets vary considerably , however , there ’ s a lot of opportunity up to $ 2 million . From smaller , new industrial unit developments on the more affordable end , to modern freehold investments on the higher end , there ’ s also been a high level of older-style freehold assets transact which shows good affordability mid-range .
Medical / Healthcare Assets - Over the past five years , medical facilities / allied health service assets have grown in popularity across savvy commercial investors who have identified the growing need for space in sectors such as sports and cosmetic medicine . During COVID-19 , increased need for pathology saw buyers pounce on this sector of the market , looking to capitalise on high occupancy and growing rents . Our ageing population , as well as health services being used across all age groups has made these properties one to focus on .
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