Bondi Junction is Sydney’s 5th largest business district, behind the CBD, North Sydney, Parramatta and Chatswood.
Comprising of around 525,000 sqm of employment space typical development consists of strip mall type development.
Retail
Rents for retail premises peaked way back in 2016 at an average net effective rent of $825 per metre. With the impact of the pandemic, we have seen rents drop by approximately 25-30%. Retail rents are sitting at an average of approximately $600 per square metre.
Office
Office rents peaked in late 2019 around $725 per square metre net effective. Similar to retail we have witnessed a decline in rental levels, however, not to the same extent. Office rents have dropped in the or of 10-15%. Office rents are sitting at around $635 per square metre.
Vacancy Rate
Vacancy is sitting at around 13%, well above the long-term average of 8%. It is currently placing downward pressure on rents. Whilst there will be headwinds in the short term the news is not all bad, firstly as we move out of the pandemic but also as investors search for income returns.
Capitalisation Rates
Investors are willing to pay for secure cash flows, for example 5 year lease terms incorporating fixed annual rent reviews. This has resulted in a tightening of cap rates. Cap rates for the sector now ranging from 3.0% - 5.5%.
The landscape is changing daily and understanding the dynamics of the current market is critical for success. That is where Wills Property can help.
If you want better results for your commercial property in Bondi Junction, selling or management call:
John Wills FAPI