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Pandemic Sparks Regional Boom: Growth for AU CRE Owners and Investors

 |  25 January 2023

As the world continues to grapple with the ongoing pandemic, one thing that has become clear is that our normal patterns of behaviour have been drastically altered. One area that has seen a significant shift is where we choose to call home.

This is an excerpt from the inaugural REIA State of the Industry: Australian Commercial Real Estate report.

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With many Australians forced to work from home, the appeal of small inner-city apartments, particularly those shared with housemates, has waned. Instead, people are now looking for larger homes with more room to move, study, and work. Additionally, being close to a CBD or city center is no longer considered essential.

These changing preferences, combined with the varying frequency and length of lockdowns across the country, have dramatically altered internal migration patterns. Regional Queensland has seen the biggest influx of people, with almost 16,500 moving there in the year to March 2021, a significant increase from the 9,354 people who moved there the previous year.

On the other hand, Melbourne has seen a large number of people leaving the city, with over 32,000 people leaving in the year to March 2021, compared to just 2,637 the previous year. Other areas that have seen a significant increase in internal migration include regional New South Wales, regional Victoria, and Perth.

The increased population in regional areas has also led to a growth in small businesses. Queensland, in particular, has the largest proportion of small businesses in regional areas, partly due to the popularity of the Sunshine and Gold Coasts. This trend presents a significant opportunity for commercial property owners in regional Queensland, as the type of commercial property demanded by these businesses will differ from that of CBD requirements.

While there may be a slight increase in demand for offices and retail in regional areas as populations grow, the demand for industrial property is expected to see the biggest growth. This is because regional populations are more spread out, making logistics, warehousing, and storage increasingly important in servicing these populations. White-collar workers in regional areas are also more likely to work from home and potentially travel to the nearest CBD or large regional town for in-person work, resulting in relatively limited demand for offices in regional areas.

For commercial property investors, the changing population trends and small business activity in regional areas present a significant opportunity to capitalize on, despite the current interest rate environment. Yields on offer for prime industrial property are far more generous in regional locations compared to their CBD counterparts, and tenant demand for them should remain strong as long as the population continues to grow.

In conclusion, the pandemic has brought about a significant shift in where Australians choose to call home, and this trend towards regional living presents a significant opportunity for commercial property owners and investors. It is important for them to understand the changing demands and opportunities in regional areas in order to make informed investment decisions.

Watch the webinar recording 

Sherif Hassan, Re-Leased Sales Director - APAC and NoAM West, and Anneke Thompson, REIA Research Consultant dive into an analysis of the Australian Commercial Real Estate Market to discuss key findings. 



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