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PROPERTY
ELDERS COMMERCIAL
Market scales reach steady balance
RICHARD STEEDMAN, Commercial
Sales & Leasing - South
CALE AYRES, Commercial Sales &
Leasing - North
THE 2023/24 昀椀nancial year brought
a return to a balanced market where
traditional commercial property
fundamentals were front and centre.
Despite an increasing interest rate
environment, the Tasmanian market
has remained resilient, with transaction
volumes steady in sales and leasing across
all sectors.
While there has been a slight softening
in yields for some asset classes, we have
seen a majority of values hold as the yield
softening has been offset by rising rents
which can be partly attributed to a shortage
of stock and substantial CPI increases,
coupled with low vacancies and steady
tenant demand.
Owning and occupying
Owner-occupiers have demonstrated
relative strength in the current market.
Businesses looking to secure their premises
have been more active in purchasing than
leasing, driven by long-term stability,
favourable 昀椀nancing and equity building.
Reduced tourism turbulence
There has been signi昀椀cant activity in the
tourism sector in the past 12 months. After
a period of inactivity post-COVID, several
hotels have recently transacted on and off
market with good demand. According to
the THA Hotel Occupancy Report, for the
year ending December 31, 2023, Tasmania
recorded a healthy 73 per cent occupancy
rate, whilst the median room rate was also
up. We expect additional growth in the
sector with the arrival of the two new Spirit
of Tasmania ferries providing increased
passenger capacity and access to Tasmania.
Resilience in retail
Despite shifts in consumer behaviour,
driven by cost-of-living concerns and
reduced discretionary spending, investor
appetite remains strong for retail assets
throughout the price-point range. This
is evident with several assets recently
transacting in Hobart’s CBD and city
fringe. The Big W-anchored Glenorchy
Plaza sold for $19.75m, re昀氀ecting a yield of
7.5 per cent, and Riverside Plaza sold after
a strong sales campaign.
Occupied o昀케ces
Of昀椀ce markets have remained tight with
limited vacancies, symbolised by Hobart’s
vacancy rate a mere 2.8 per cent (PCA Feb,
2024), by far the tightest capital city market
across Australia, compared to the national
average of 14.8 per cent. Hobart has no new
supply under construction.
We are seeing greater occupancy of
of昀椀ces, as businesses look to improve
productivity, ef昀椀ciencies and face-toface collaboration. The recent sale of the
landmark ‘Lands Building’ in Hobart’s
CBD is symbolic of investor con昀椀dence.
Tenant demand in Greater Launceston’s
of昀椀ce sector has remained stable, as
regional areas have also been less impacted
by the “work from home” trend.
Growing industrial investment
The industrial sector has had the most
activity in the past year, with good demand
from investors and owner-occupiers alike.
Lower maintenance, simpler assets and
generally lower value/entry points remains
attractive to investors, and growth in
e-commerce is pushing rents and keeping
the vacancy rate low. This trend was
evident in Northern Tasmania, providing
signi昀椀cant support to the commercial
market as a whole.
Property View
Elders Commercial is proud to present our new dedicated
Tourism & Hospitality Team consisting of Tom Balcombe,
Matthew Wallace and Claude Alcorso.
With an extensive background in
professional services and commercial
real estate transactions, the Team
are available to assist with any hotel,
motel, hospitality and freehold
business sale, and the Team will
continue to engage John Blacklow as
a consultation when required.
The team in red, you can rely on.
5 Victoria Street, Hobart 7000 I 03 6220 6999
54 Cameron Street, Launceston I 03 6333 7888
4 Stewart Street, Devonport I 03 6424 3568
Elders Tasmania
24 TASMANIAN BUSINESS REPORTER, September 2024
