Confidence levels for the next 12 months see slight decline
Commercial property market sentiment remained negative in the third quarter of 2024, a new report from NAB found.
In NAB’s Commercial Property Survey for Q3 2024, it was revealed that the Commercial Property Index was at -2 index points, showcasing how market sentiment remained in the negative during the quarter.
In the report, NAB group chief economist Alan Oster (pictured) pointed out that sentiment was still disparate across various sectors. Despite the improvement, it was still negative for the sectors of office and retail property, unchanged for industrial, and neutral in CBD hotels.
“Overall sentiment improved in all states in the September quarter but ranged widely from -24 in VIC to +52 in WA. Office sentiment improved in all states bar NSW. It also lifted in all states in the retail (except VIC) and industrial (except NSW and SA/NT) sectors,” said Oster.
The report found that the outlook for capital growth in the next 12 months was highest for industrial property at 2.3%. Meanwhile, values were expected to fall for the sectors for CBD hotels, office, and retail property.
“Survey participants estimated overall office vacancy at 11.1% in Q3. Vacancy fell in all states except VIC where it climbed to a survey high 14.6% amid the biggest supply overhangs in the country. National office vacancy is expected to fall to 10.1% and 9.3% in the next 1-2 years respectively and remain highest in VIC and WA,” said Oster.
“Industrial vacancy inched up to 3.2% in Q3, though space is still quite limited, particularly in WA (1.9%). Industrial vacancy is expected to rise further in the next 1-2 years (3.4% & 3.8% respectively) amid reports of steady supply additions and moderating tenant demand. Overall retail vacancy held steady at 6.3% but is expected to ease to 5.8% in the next year, ranging from 4.6% in QLD to 7.0% in SA/NT,” he added.
