South East Queensland is one of the most promising areas in Australia. The current environment makes for an exciting and fast moving commercial real estate market - one that offers considerable opportunity to those who know how to take it. Stephen Kidd, a commercial retail sales specialist at Ray White Commercial Queensland, is one such fellow.
He and his son Elliot work together in our Brisbane commercial office, and have a reputation for excellent client service, straight talking and consistently getting results. We sat down with Stephen to gain a valuable insight into the current state of the retail market in South East Queensland.
Positive movement in the market
All signs point to the commercial market in South East Queensland staying strong thanks to a resurgent economy and burgeoning interest from investors. From Stephen's perspective the retail market in Brisbane and wider South East Queensland (SEQ) is in a particularly positive place:
"The market seems to be strong at the moment - whatever we've got to sell there's buyers for it and prices are firmer now than they have been in past. There seems to be plenty of money for people to buy while interest rates are low. It's a great time to buy property. There are so many quality assets out there right now so buyers can always find what they need."
Stephen explains that the lion's share of development is thanks to stellar population growth in SEQ and Brisbane, meaning that in future as the population continues to grow, things will only get better. Investors in this market are spoilt for choice as well.
There are countless assets available that are ideal for investment in the area, all well-leased, set-and-forget properties. Stephen claims that investors almost can't go wrong in the area if they're smart and follow a few basic rules:
"Everything is performing well as long as there's growth. As long as the rent fundamentals align with the occupancy costs for each of those tenancies compared to the turnover which they're making you should see good investment performance."
If he were to pick a star performer, however, it may be logistics and warehousing:
"The industrial sector is so buoyant right now because of logistics - people are importing goods from overseas and there's a need for services to move and store those goods."
The main thing he says is for investors to ensure their tenants' offering is in demand where they are and is not under threat from disintermediation and disruption. After all, a successful tenant usually makes for a profitable investment property.
What's in the future for Brisbane?
"For every 10,000 new people you need a new shopping centre and a couple convenience centres so there's a lot of population led-demand for retail assets."
South East Queensland and Brisbane in particular are only going to get better with time. Stephen points to population growth as one of the main drivers behind this continual success and improvement:
"There are a predicted 65,000 people coming into Queensland over the next few years and two-thirds are moving into the South East corner. For every 10,000 new people you need a new shopping centre, a couple of convenience centres and a few gas stations so there's a lot of population-led demand for retail assets. That's why there's so much development going on in the outer areas between Brisbane and the Gold Coast, Brisbane and Ipswich, and Brisbane/Redland."
Stephen's praise for the area focuses on how exciting the changing market is right now and how much has changed since he started out:
"It's a very exciting market in Brisbane - the council has created all these commercial areas like Rosalie, Ascot and Bulimba where you can build high-rise and put in niche coffee shops. they're enabling people to wander around without driving cars. People are able to walk across the road from where they live and do whatever they do without leaving the area. It's becoming a very walkable liveable city, which is brilliant for retailers"
The city itself is a much more lively place to be, and it's constantly morphing and changing to keep up with the newest thing. Compared to when Stephen started out, he says it's a whole new world:
"Back then there was no mall and to go shopping. You parked on the side of the road and popped into a tiny neighbourhood shop which was closed after lunchtime. It's a far more interesting place to live and work these days."
As a result of increasing demand the retail sector is tightening and becoming more competitive, which is almost always a good thing for investors:
"Yields have firmed and prices have risen. As the population continues to grow - so too will the opportunities available to investors. I can't see yields changing at all until Interest rates change - everything's tight at the moment," Stephen Said.
Nearly 30 years ago Stephen decided the family furniture retail business wasn't for him and set about finding a better way to make money. He settled on commercial real estate. Since he made his first deal of $14 million three decades ago, it's been all up for him and he's now one of the leading commercial retail agents in the state alongside is son Elliot Kidd.
