Townsville retail market begins to improve while Cairns remains flat: HTW

Throughout 2016 Townsville’s retail market remained patchy, according to Herron Todd White’s recent report.

The property valuation firm says that the total transactions of all properties have equalled to $5 million.

"Quality properties with strong lease covenants transacted, several high profile neighbourhood shopping centres changed hands and a number of smaller showrooms, bulky goods centres and convenience centres also transacted at around the $5 million mark," the report commented.

This indicated a strong improvement for quality assets in regional areas at investment yields of circa 7%, demonstrating the yield disparity when compared with similar style assets in the southern metro markets.

"The year ahead for the retail sector is likely to remain patchy, with quality property with strong lease covenants continuing to attract interest.

However the balance of the market is likely to remain in a holding pattern at the bottom of the market cycle," the report warned.

The Cairns retail market passed through the bottom of the cycle during the course of 2014, but the limited recovery thus far means that the retail property market remains relatively flat.

"It must also be said that retail property sales in Cairns are extremely sporadic, with most sales involving retail property of mixed use retail and office buildings or tenant buyout of single premises.

High exposure CBD retail space remains reasonably well occupied, but vacancies are more noticeable in the lesser exposure locations and on the CBD fringe.

Rents have remained generally stable, showing ranges of $600 to $800 per square metre per annum for prime CBD space and $1,000 to $1,500 per square metre per annum in key tourist precincts such as the Cairns Esplanade," the report stated.

"Blue chip retail located within the main Esplanade tourist strip as well as the central business district shows reasonably low vacancies, although there is also limited demand from new businesses.

"There remains good investor demand for well leased properties which rarely come onto the market.

"Though the economic conditions in Cairns are likely to improve through buoyant tourism activity, little change is expected in retail market conditions during 2017."