What difference does waterfront make?

Commercial properties come in all shapes, sizes and locations. While different properties have different drivers, it is fair to say that for many commercial properties and development sites, being on the waterfront is one of the most attractive features a property can have.

Having listed 13 waterfront properties in the last few years, I am able to offer insight into some of the pros and cons of these types of properties:

Pros

• A view that people will pay more for - Commercial and residential rents and sale prices for waterfront properties consistently exceed those which are in proximity but do not face the water. As an example, commercial lots in Port Coogee that face the marina sold for an average rate 15% higher than those in the same complex but without a direct water view (and closer to 30% once you remove an outlier). On the apartment side, our residential sales team reports that water-facing apartments will typically sell for 30-40% more per square metre than apartments not facing the water or with only partial water views. In addition to this, absolute waterfront properties are received more favorably by the market as the concern about the view being 'built out' is non-existent.
• Natural retail exposure - Retailers and Food & Beverage operators benefit from the beach generating foot traffic from sunrise through to after sunset, 7 days a week (weather permitting). While the operator and their offering are still paramount, this increases the likelihood of a new business's success in these busy locations. It also will attract better quality operators who will pay a higher rent for this increased exposure than for other locations.
• Finite Supply - There is only so much waterfront land available in Perth. Whilst we have sprawled up and down the coast and river, the finite supply creates a more attractive and higher priced product.
• Depth of market - I recently marketed arguably the best oceanfront residential development site in the last few years at Lot 500 Reserve Street, Scarborough. This property received almost 80 enquiries and, despite closing the campaign during Perth's first COVID lockdown, many offers. When we close a campaign and have a large number of offers, this gives our vendors a position of strength to negotiate from. This kind of huge enquiry and offer numbers is reserved for A+ properties, and as the image shows, it's easy to see why this property met that criteria.

Cons

• Parking - Ever been to Scarborough or Cottesloe for a swim on a Saturday in January? Tough to find a parking bay. Whilst all this foot traffic is good for businesses in one sense, it can present problems which need to be managed through smart parking operations. This is part of the reason why we are seeing the City of Stirling push for light rail or trackless trams from Glendalough to Scarborough.
• Reduced catchment (albeit in a busier location) - Whilst only applicable to some commercial uses, having part of your catchment made up of water can lead to a decreased opportunity for trade. On the flip-side, in many cases this is more than made up for by the fact that the beach is a naturally a busier location and thus trade potential is restored or even improved.
• Everyone has an opinion - As has been seen with the proposed development of the Yelo site on the oceanfront in Trigg, everyone will want a say in what happens on the site. Whether they be supporters or in opposition: neighbours, media, local action groups, passer-by's, elected members and many others will want to have their opinions and concerns heard and actioned.
• Coastal Degradation - There are a number of planning and physical protections in place to protect land or buildings from coastal degradation, however over the years this can still occur. With further modern building standards and environmental protections, these may reduce.

Ultimately, every waterfront property that we have marketed has been well received by the market, showing that the pros far outweigh the cons.