New Colliers report highlights Townsville’s lack of stock and new construction

A soon-to-be released property report has highlighted key issues that could act as ‘growth bottlenecks’ for Townsville’s economic future. Read why some sales have plunged.

Colliers Townsville managing director Peter Wheeler says the CBD is enjoying its most active property market in more than 25 years.

A lack of available stock is acting like a handbrake on Townsville’s commercial property sales numbers, keeping prices high and forcing buyers to pursue other alternatives, according to a new report.

The Townsville Market Snapshot End of Financial Year Report 22/23, compiled on behalf of Colliers Townsville by Townsville economist Callum Kippin, painted a rosy picture for the region’s economy which was powering ahead thanks to well below-average unemployment, strong population growth, and major construction activity.

While retail sales had risen by 4 per cent, and office sales were up 17 per cent, commercial property sales were down 36 per cent and industrial sales were down 58 per cent.

Colliers Townsville managing director Peter Wheeler said it may seem like sales of commercial and industrial properties had “half fallen off a cliff” in comparison to the past two years, but it wasn’t all bad.

Previously, buyers had snapped up properties in a post-Covid “frenzy” in a bid to take advantage of low interest rates.

Commercial property sales trends for the Townsville region. Picture: Colliers

Industrial property sales trends for the Townsville region. Picture: Colliers

“(Sales numbers have) dropped considerably, because there is simply not enough stock around, the demand is certainly outweighing supply,” Mr Wheeler said.

“With (high) construction costs … it’s making it very hard for developers to build new stock.”

This was helping maintain high property values for the owners of existing properties.

“Because people know that it’s going to cost a hell of a lot more to build,” he said.

“How long is it going to take to build because the builders that we have here are stretched and contractors are a bit thin on the ground?”

Colliers Managing Director Peter Wheeler outside the Bushland Beach 7-Eleven service station which sold for $5.45m to southern investors. Picture: Shae Beplate

In a “silver-lining” to the stock shortage, Mr Wheeler said Townsville’s commercial property vacancy rate had dropped from about 25 per cent in 2020 to 14 per cent on Colliers’ rent roll, as previously overlooked older, cheaper, and smaller properties were snapped up.

The stock shortage ensured prices remained high with larger-sized industrial properties seeing close to 50 per cent price growth, along with suburban retail which surged by 65 per cent.

Sector breakdown for Townsville's commercial property sales for FY2023. Picture: Colliers

With 28 years in the real estate industry, Mr Wheeler had never experienced as much leasing activity in Townsville’s resurgent CBD as he had in the past two years, particularly with office space.

He credited Townsville’s pivot towards green energy and critical minerals, along with the rollout of major projects, population growth, and low unemployment, for the interest in investors “wanting to get a foothold” in the region.

PvW Partners Townsville Business Confidence Change Index. Picture: PvW

In his report, Mr Kippin flagged the potential “growth bottlenecks” of the ongoing worker shortage matched by an under supply of housing necessary to grow the workforce, which “may constrain future economic growth if not addressed urgently”.

Referring to the PvW Partners Townsville Business Confidence Change Index, he said it had steadied in the last quarter, after four consecutive falls, remaining slightly positive.

Originally published as New Colliers report highlights Townsville’s lack of stock and new construction