Herron Todd White Valuers September Review
As published by Herron Todd White Valuers
Click HERE for a full September report.
Toowoomba – The $500 million plus redevelopment of the QIC owned Grand Central Shopping Centre has predominantly been completed. The redevelopment has seen the centre double in size to approximately 90,000 square metres and introduce new discount department stores, supermarkets and approximately 160 speciality stores. The anchor tenants of the extension include Woolworths, K-Mart, Big W and Best & Less. Centre management has been aggressive in leasing the new specialty shops, concentrating mostly on national quality retailers. The specialty rentals achieved in the centre are at the upper end of the Toowoomba market, with lease incentives reportedly available for quality tenants willing to commit long term. Over the past 12 months there has been an increase in leasing activity within other areas of the Toowoomba CBD. The majority of activity has been to cafés, bars and restaurants. The majority of these operators are new to Toowoomba and this has resulted in a strong influx of new options for local diners. This demand has seen CBD rentals remain relatively static, despite the potential competition for tenants from the Grand Central redevelopment. Leasing demand for shops in smaller convenience retail centres has declined which has resulted in a slight increase in vacancies. To date face rentals have been static but lease incentives are often required to secure new tenants. There are a couple of new food based retail centres currently being developed in suburban Toowoomba. Market leading rentals have been achieved for these new developments with fit-out contributions commonly provided by developers as lease incentives. These market leading rentals are often required to make new developments financially feasible but have not yet been proven to be sustainable.
The Toowoomba and surrounding residential property market remains steady at present with low sales volumes wide spread across all sectors. Being one of the more affordable regional locations in Australia, Toowoomba and surrounding suburbs offer an opportunity for many different types of home owners. With various industry and job opportunities, a central hub location, a diverse property market and varying segments, there are many different home owners whether first home owners, families, or empty nesters. While lending has tightened and property ownership has become more difficult for the next generation, there are still good opportunities in the Toowoomba region to become a home owner. Strategies such as joint ownership can also bring affordability to young people getting their foot in the ownership door and out of the rental market. The typical product attractive to first home buyers tends to be in the sub $450,000 segment, being new 2- and 3-bedroom units as well as 3- and 4-bedroom houses located in active investor areas in the western suburbs of Toowoomba and satellite suburbs such as Cambooya and Wyreema. The other trending option is to buy older housing in more established areas. Families generally seek slightly different properties to first home buyers, with a focus on more space (i.e. 4-bedroom houses), bigger back yards and close proximity to schools. This type of housing is found throughout Toowoomba, Highfields and Westbrook in the sub $600,000 segment. Empty nesters seem to stay put in the family home or down-size to unit or villa living and seem to fill the higher priced property segment. Attached housing and detached housing on small lots are tending to grow in popularity throughout the Toowoomba area, particularly in the older areas close to the CBD. The dream of having a big back yard appears to be changing. Many infill blocks have been sub-divided into smaller lots or have had unit complexes built on them. This type of product may be attractive to empty nesters looking to downsize for maintenance and convenience reasons. Attached housing is also becoming more appealing to first home buyers for affordability. This product is often more suited to home buyers than investors due to costs for the location and resulting returns on capital. The sector in the home buyer’s market which appears to be most active is upgraders looking to get into a bigger house or a more desirable location. Properties in areas such as Rangeville, Middle Ridge, East Toowoomba and Mount Lofty seem to be what is sought after by this sector.