Commercial real estate has a bright future

The starting gun has gone off and sales in Ballarat are gaining speed

INDUSTRIAL land sales in the region have finally got a move on.

Figures show somewhere between 25 to 30 percent increase in the prices for industrial land over the last 12 months.

Population growth, residential development, heritage building upgrades and the GovHub are driving commercial investor interest according to experts from the Ballarat offices of Colliers International, and Ray White Commercial.

Land sales are benefitting from the expansion of residential real estate due to “unprecedented population growth,” said David Wright, Managing Director of Colliers International Ballarat.

“Our current offering of almost four hectares of mixed-use-zoned land adjoining the Delacombe Town Centre which we are advertising, was on the market 10 years ago.

“Now is the right time to have this property back on the market as investors can clearly see the realities of residential expansion in the area therefore speculation is reduced.”

As mixed-use land it opens countless possibilities for development and possible subdivision.

Over the last 12 months industrial land has shown a quite significant growth in values which is probably the first significant shift seen in the last five plus years.

“Sales have been stagnant,” Ray White’s Director Trevor Booth said. “In the past, developers were not prepared to be risk takers and bring new land to the market.

“But the ongoing growth in the residential sector plus increase in infrastructure in Ballarat is driving renewed interest and sales in industrial land.”

Love it or hate it the GovHub is also shaking up the status of commercial real estate in the city.

Commercial investors and developers are busily updating the properties opposite, increasing the hospitality hub around the corner in Armstrong Street.

“The GovHub is going to be a major generator of complementary businesses,” Mr Booth said. “There will be demand for commercial offices for similar agencies and businesses who will feed off some of the Hub’s tenants.

“The carry over effect is council is very keen to see multi story office buildings and multi-story high density residential apartments constructed east on Mair Street from Camp Street onwards for convenience to the GovHub and the station.”

The station precinct is also seen as a driver for the increased interest in commercial properties.

The ongoing upgrade of the North Star Hotel in Lydiard Street North and Ballarat Station precinct renewal point to optimism by commercial purchasers who recognise and identify the importance of tourism to investment.

“With the historical building in Lydiard Street North, known as the Miners Tavern, on the market there is an opportunity for passionate investors to develop it for alternative uses such as accommodation, residences and or commercial office spaces,” Mr Wright said.

The recent refurbishment of the Unicorn Hotel on Sturt Street by commercial developers is further proof of interest.

Heritage buildings the likes of Craig’s, the George and the Provincial are the drawcard for visitors to the city.

“The refurb of the Provincial across the road from the railway station provided not just accommodation and hospitality it also houses commercial office space,” Mr Booth said.

Internal obsolescence and heritage controls have kept investment in historical buildings for commercial use at a low level.

While the external facades can be maintained, internally these types of buildings often remain vacant and under-utilised as office space.

“The modern-day office environment requires the necessity of lifts, air conditioning and open office space,” Mr Booth said. “It’s not impossible to do that and some of these buildings are in desirable locations in the heart of the CBD.”

Both Mr Wright and Mr Booth agree the status quo remains within the retail environment on Sturt Street and into the Bridge Mall.

Mr Booth said Ray White Ballarat has seen vacancies in Sturt Street reduce over the last 12 months.

“We have been involved in leasing quite a few retail premises in Sturt Street lately” he said.

“But once you get to Grenville Street, the interest and enquiry rate for the Bridge Mall is almost negligible.”