Recovery picks up steam on back of business confidence

Mike Bayley, managing director of Bayleys Corporation. Photo / Supplied

The commercial and industrial property market appears to be gathering serious momentum at last, says Mike Bayley, managing director of Bayleys Real Estate.

In the introduction to Bayleys latest Total Property portfolio, released today, Bayley says signs of a pick-up in activity, particularly in higher-value transactions, have been evident since late last year but it has really only been in the last three months that there has been a noticeable and significant resurgence in the market.

"While sales volumes and values are still well off their peaks of the mid-2000s, more normal levels of activity appear to have resumed in a market that had previously struggled to gather any sort of traction since the global financial crisis struck in 2008." The recovery has spread through all segments of the commercial and industrial sector.

"Particularly encouraging is the increase in leasing and owner-occupier activity across all types and sizes of accommodation. This shows that business activity and confidence is on the move again and this is what drives the property market."

In the investment sector, the sub-$5 million part of the market has held up relatively well during the downturn, says Bayley, and demand is now outstripping supply by a considerable margin for well-located and tenanted property. "We are also seeing the re-emergence of more entrepreneurial investors looking for added-value opportunities and willing to take on some leasing risk with partially tenanted buildings.

"Even the land bankers are back, with well-capitalised investors making the most of some very attractive prices for large blocks of land."

However, Bayley says the most discernible increase in activity has been in the higher-value, $10 million-plus segment of the market where an increasing number of transactions are being concluded.