In a post-COVID world, the Wollongong CBD is well-placed to be an in-demand location for businesses to establish satellite offices, a new report suggests.
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Knight Frank Australia has made the claim in a new report into the Wollongong property market, focusing on the industrial, commercial and office property sectors.
It says that strong population growth rates are forecast to continue during the next two years, and it's expected that the region's ability to attract residents seeking to decentralise or increase their capacity to work remotely due to the pandemic will continue to rise.
Over the past 18 months or more there has been an accelerated shift to remote working practices across the world.
The report says this shift has boosted the appeal of regional locations, as workers have traditionally aimed to live closer to their workplace.
"Given the relative affordability of housing and natural amenity of Wollongong, the region will benefit from this shift as people are no longer restricted to housing in relative proximity to their workplace," the report says.
"Furthermore, it places Wollongong CBD as a destination for businesses to establish satellite offices and boosts appeal for serviced office/co-working operators to increase footprints in the region, especially off the back of the increase in tech businesses, which will likely grow in head count and thus require more office space over time."
The report also found that Wollongong's industrial market is experiencing a period of strong growth, fuelled by higher rates of e-commerce usage as a result of the pandemic.
"With Wollongong's port of Port Kembla uniquely positioned to service the rapidly growing south-west markets of Sydney, the connectivity to the new Western Sydney International Airport will drive a further uplift in occupier demand from transport and logistics related users, as well as increase tourism and population growth rates over the longer term," the report said.
Other findings from the report include:
*A 12 per cent increase in office stock over the past two years with 18,601 square metres of new stock added across three major developments.
*A-grade office vacancy rate has jumped to 13 per cent off the back of new development completions, which will provide more options for tenants considering locating in Wollongong.
Ben Burston, chief economist at Knight Frank Australia said Wollongong is continuing its transformation from an industrial heartland into a thriving and innovative services-led economy.
He said Port Kembla's status as a large steel production hub and a gateway for freight and logistics remains a key strength, but other key sectors including technology, defence and higher education are also now driving Wollongong's growth and standing.
"This has attracted an unprecedented level of investment into upgrading its infrastructure and skyline, including $1.6 billion of investment in the CBD in recent years and a further $400 million in projects in the pipeline," he said.
Mr Burston said the evolution of Wollongong's office market reflects this progression with substantial growth in A-grade stock over the past two years and much more to come.
"Over the 24 months to January 2022, the Wollongong CBD recorded its largest influx of new office market supply with 18,601 square metres of new stock added across three major developments, an increase of 12 per cent in total office stock to measure 170,819 square metres," he said.
"Over the coming years the Wollongong CBD is forecast to reach over 190,000 square metres of office space if all schemes in the development pipeline come to fruition.
"A positive demand outlook, coupled with growth in face rents and relative yield disparity to other major non-CBD markets, will only enhance the appeal to investors for quality assets in the Wollongong CBD."
Mr Burston said in 2022 and beyond, they expected Wollongong to continue to expand and diversify its industry mix, potentially including an expansion in its role as a defence hub tied to the government's announcement of a new base for the submarine fleet on the East Coast.
"This economic expansion will unlock further growth opportunities across industrial, office and residential property markets," he said.
Brendan Crabb
I'm a member of ACM's national property team, covering the Illawarra and South Coast. Based in Albion Park, NSW, I write about exciting, interesting or just downright quirky properties that have been listed for sale, major sales, market trends, auctions and more. One of my favourite aspects of being a journalist is I believe everyone has a story to tell. What's yours?
I'm a member of ACM's national property team, covering the Illawarra and South Coast. Based in Albion Park, NSW, I write about exciting, interesting or just downright quirky properties that have been listed for sale, major sales, market trends, auctions and more. One of my favourite aspects of being a journalist is I believe everyone has a story to tell. What's yours?
