Jim Tsagalis, Managing Director at Lease Equity Pty Ltd, provides a brief overview of the key property market trends ahead of his upcoming presentation at the 10th Annual Retail and Commercial Leasing Review on Tuesday 24 March 2020.
What are some of the key trends and developments having an impact on the property market in WA right now?
West Australian economy has not recovered after the downturn post the mining boom. This added to the distribution caused by the internet, and more recently, Coronavirus has had a profound impact on Property. This is due to the reduction in tourists and separately effect on supply chain. Supply chain may be the availability of stock or building materials.
How to document, say, turnover rentals of food and beverage retailers where delivery providers charge retailers more than 25% to deliver means that percentage may need to have various thresholds to allow for the change in profitability.
Is there a particular market where the landscape is changing or is in a state of flux in WA?
There are a number of mega trends affecting property globally, which are also affecting the Perth property market. Offices are being disrupted by the onset of co-working space. The need for long term leases may be reduced. Also, the co-working spaces may become competitors to the landlord for expansion of existing tenants. Artificial Intelligence and automation is having a direct impact on industrial property. Size of distribution facilities and access are becoming more important. The internet and delivery platforms are affecting retail property.
How would you briefly describe WA’s retail and commercial leasing market?
The retail market is in one of the worst downward trends in living memory. Demand has reduced by over 70%. The number of closure/ bankruptcies has increased the supply side. The commercial market is beginning to grow momentum and is improving with the take up. Most is related to the mining industry.
What are some directions the market might be heading towards?
Commercial (office) is likely to continue to improve. We expect industrial also to continue improvement. Retail is most likely to continue to decline.
These will all depend on mega trends and more specifically the growth on domestic population.
Are there any incorrect assumptions or misunderstandings that you see legal practitioners sometimes make regarding the property market?
That the tenant and landlord are truly in a partnership. The landlord is a supplier and the contracts that document that relationship needs to build flexibility for how the landlord provides amenity. Leases will be shorter in response to the changing technology and work practices.
Is there a tip you can offer practitioners on staying on top of property market trends?
Having more face to face meeting with leading property professionals and try to garner an understanding of the drivers and likely changes that will eventuate.
The impact for example of the internet on sales will directly impact in store sales and viability.
Jim Tsagalis has over 25 years of commercial property experience across all sectors including retail, industrial and commercial property leasing, sales and asset management. He is a leader in the property industry and recognised as one of the best in Australia. He has a thorough understanding of the national retail scene and has dominated the CBD and suburban leasing markets for over 20 years in Western Australia. His ability to finalise projects is well documented, which has served to translate into substantial value for his clients. He has transacted more than 1,000 retail leasing deals, averaging almost 100 deals per year and overseen more projects that any other agent in Western Australia. You may connect with Jim via LinkedIn