Cardiff and Inner Industrial Newcastle buck property vacancy trend

As a local business owner and employer, I was determined I would try to address in this column some positive trends for these unprecedented times.

However, after completing the latest Raine & Horne Industrial Average, the news, which I will address shortly, is drearier than I was expecting. That said, my view is that we would all rather know a flood is coming, rather than continuing with our picnics oblivious to the storm pelting down upstream.

That warning aside, I’m also pleased to say the Industrial Average shows some good news for owners of industrial properties in Cardiff where vacancy rates have fallen from 6.34% in January to 4.65% and the inner suburbs of Newcastle (6.73% down to 5.26%).

What the industrial average tells us

The Raine & Horne Industrial Average is the measurement of available industrial floor space over the total floor space, measured on our major industrial suburbs.

As Breakout 1 demonstrates, the July 2020 Average has risen to 7.7%. This is the second-highest vacancy level since measurements started in 2011 and just ahead of March 2016. The latest average, however, is the largest six-monthly change since we launched the index.

Fortunately, there is some wheat amongst the chaff with two areas, as I mentioned earlier, Cardiff and the Inner Suburbs showing improvements (see Breakout 2). The improved showings could be the result of the opening of the long-awaited road through to Boolaroo, which has improved demand for industrial space in Cardiff, and our inner industrial areas being insulated from the direct effects of the coal industry.

While for many these statistics are just numbers that have little impact on their lives. However, I look at these findings as jobs because every square metre of industrial floor space equal part of a job, part of someone’s livelihood and part of our community’s overall health.

Personal experience supports the statistics

In the last month, I have had four friends in different industries lose their jobs. Three of these mates had no idea the day they went to work; they would be turned around and sent home. Unfortunately, two have young families and the others are aged around 60-years-old. This story of unemployment continues not only around Australia, but the world and it dries up the flow of money for discretionary spending as people bunker down and spend on necessities only.

This story is being repeated across the Hunter not only in the commercial and retail sector, but now it has crept into our industrial sector. Through the height of the first lockdown, the wheels of industry continued to spin, and my team was highly active leasing and selling industrial property. Indeed, industrial turnover was enough to replace the loss of the commercial and retail sectors.

Yet, while industrial activity continued, the first warning signs were the number of lights on ships as they moored just off the coast – it was like a new suburb on the ocean was springing up. As the coal price fell, more and more coal ships arrived to wait in line for their turn to load.

As a consequence, the coal price is 25% lower than January, which was then 58% off its July 2018 peak. This is a significant metric as coal company spending is still the major driver of the industrial sector in our region, although not as substantial as a few years ago.

Breakout 1: Raine & Horne Industrial Average 2011 – 2020

Breakout 2: July 2020 Raine & Horne Industrial Average

If you’re considering investing, buying or leasing commercial space in the Hunter region, contact Raine & Horne Commercial Newcastle on (02) 4915 3000.

Post written by Steve Dick
0425 302 771
steve@rhplus.com.au

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