Retail market in Lismore faced challenges for landlords before the recent flood: HTW

Lismore’s retail market had been forecast to remain the same as 2016 except with slightly reduced sale rates, according to Herron Todd White’s recent report, which was issued just prior to the flood that hit the NSW town.

“We envisage the retail sector for the NSW Far North Coast to be a continuation of 2016, however, with slightly reduced sale rates and less volatility in pricing growth for the more coastal situated properties,” the report stated.

The property valuation firm also says that pricing growth will be less volatile for coastal situated properties.

The report noted the coastal located townships of Byron Bay, Mullumbimby, Bangalow, Lennox Head, Ballina and Yamba will continue to be impacted by increased demand and limited supply of good quality stock.

The owner occupier purchasers will continue to lead the market in most regional townships; however, the investors will continue to be prominent in the traditional high demand townships of Byron Bay and to a lessor extent Ballina, Lennox Head, Yamba and Mullumbimby.

Byron Bay rents in prime CBD locations have been steady with recent increases noted.

"The current firming in yields noted during several prominent sales over the Christmas/New Year period is expected to stabilise over the balance of 2017, with the market remaining strong.

The strength behind Byron Bay’s retail market remains with the tourist industry.

Local businesses are reporting a very strong tourist presence in the first two months of the year and this is expected to continue strongly throughout 2017," the report stated.

The investors will continue to be less prominent in the regional centre of Lismore and the regional townships of Casino and Kyogle for product priced under $500,000.

"This is likely to be a result of the historically limited supply of true investment product as well as downward pressure on rents.

There are currently increased vacancy rates in the Lismore CBD and this will cause uncertainty in being able to obtain a tenant over the balance of the year, the report noted before the recent flooding.

"From an investors perspective, the current price points up to $500,000 being paid by predominately owner occupiers in the regional townships (who are securing a premise to operate their business from and are less concerned with yields) are not considered to be great buys by potential investors (given the low yields and vacancy risks)," the report advised.

For the 2017 year ahead, the sub $500,000 market for retail property in non-coastal townships will continue to be driven by owner-occupiers looking to secure a location for their business.

"These acquisitions appear to be reasonably prudent given the low interest rates and generally stable to improving economic conditions.

Major retailers will remain strong and as a result of this, smaller mum and dad type businesses will continue to ‘do it tough’.

This will be reflected in the rental market - rents will remain stable in prime locations and there will continue to be downward pressure on secondary located properties," the report warned.

However, if the increasing vacancy trend in the Lismore CBD continues, downward pressure may begin for more centrally located properties.

It appears interest rates will continue to remain relatively steady with no indication of possible rate rises.

A"s such, throughout 2017 there should be continued interest from private investors and private super funds looking for superior returns (other than those available from the banks).

National tenanted properties will remain well sought after with stable to slightly lower yields," the report stated.