In the latest article in our series exploring the trends and themes that will shape the commercial market over the next 12 months, we look at the social factors currently in play.
While economics and politics will be the major influences on the commercial market in the short to medium term, social themes will also play a role.
Commercial property owners hoping to cash in on the Asian population boom will increasingly look to mixed-use development as we move into 2018 and beyond.
With the census revealing an increase in the number of Chinese and Indian residents calling Australia home, experts say the lines between commercial and residential developments will blur.
POPULATION KEY TO GROWTH
Demographer Bernard Salt says the growth in population in key regions has been reflected in the evolving commercial market.
“Population growth is really the key multiplier for the economy and commercial property, so we are certainly seeing a strong relationship between population growth and the take-up of office space within that market, particularly in Victoria,” Salt says.
In NSW there has been a push toward people living closer to the CBD, with increased activity in areas like Parramatta.
“It’s an area where you will see significant commercial development activity in the next three to five years and that’s led by population growth and the push west with big infrastructure projects,” Salt says.
De-centralisation strategies are also driving the market.
CHINA MOVES IN
With the Asian population in Australia almost doubling in the last 15 years, CBRE’s head of research, Australia, Stephen McNabb says there has been a distinct shift in market expectations.
“It means over time there are changes in demand on what households are expecting in terms of residential accommodation and proximity to employment,” he says.
McNabb says a spike in immigration, coupled with the ongoing tourism influx, is another sign Asian interdependency is growing.
“The expectations within those cultures are a little different to the traditional expectations of the Anglo-Saxon-based populations in terms of higher density living.”
He says that increasing density of housing is evident in pockets across major metropolitan centres, and particularly in Sydney, where it is obvious along rail corridors.
“You see a lot of residential encroaching into commercial spaces in Chatswood and Macquarie Park,” he says.
“It drives a change in use and expectation. Commercial property owners will look at how they can add value to assets in mixed-use environments.”
The social trend of sharing space is also on the rise. Co-working providers are increasing their footprint in Sydney and Melbourne, but have also had a major impact in Adelaide, where about 29 individual shared work space environments have launched.
“Niche small business start-ups are looking at how they can enter the market more efficiently,’’ McNabb says. “Co-working spaces offer a cooperative, collaborative environment without the costs of being a sole occupier.”
Investment growth in Australia is gaining momentum as the nation leverages its reputation as a sure bet.
“There are pretty strong, structured rationales for investment in this region,” JLL national director, head of research Andrew Ballantyne says.
“There is a good long-term story about capital flows into this market.
“The fixation in China is relevant but India has the potential to be even bigger.”