If you're an investor looking for a first-time industrial investment, here are some tips from a seasoned industrial property expert.
Investors who are willing to look beyond traditional investments in residential property can enjoy higher yields from industrial real estate. To help, we've asked property expert Mark Bond of Facey Industrial to give us his insights on the Victorian market, as well as some tips on selecting industrial property.
Where growth is driving demand
Thanks to its strong infrastructure and proximity to major centres of economic activity, Melbourne's west continues to see increasing demand, as evidenced by the ongoing development of industrial ‘super sheds’ over 20,000 square metres in size designed to service the transport, warehousing and logistics industry.
Bond says the ever-expanding residential growth in the south-eastern Casey Cardinia area has strengthened the demand for quality business parks, creating opportunities for investors in the sub-$1M category. Suburbs such as Pakenham and Cranbourne have also benefited greatly from this residential growth, whereas Dandenong South has been a star performer mainly due to infrastructure such as EastLink.
According to the Colliers Second Half 2014 report, Melbourne’s north-west and south-east industrial markets have approximately 12 million square metres of gross lettable area each, and are the fastest-growing industrial precincts in Australia, with approximately 1.5 per cent of floor space being added each year.
Infrastructure is key to success
Bond emphasises that infrastructure is a key driver of Melbourne's industrial success. “Put simply, it's easy to get around,” he says. “For example, improved amenities outside of Melbourne's CBD have now made it possible for large employers to consider Dandenong, Narre Warren, Frankston and Scoresby.”
What to look for in an industrial investment
When evaluating industrial real estate, Bond says that asking questions about zoning and its impact on the property in the future is vital. In addition, location is critical when you’re assessing an industrial investment – the growth of online shopping means consumers want goods delivered quickly.
“Another key factor when evaluating an investment is the age of the asset. There are many financial benefits to be gained by buying off the plan or purchasing a property in its first year of existence, including stamp duty savings (for off-the-plan purchases) and warranties on mechanical equipment like air conditioners and roller doors, as well as roofs, concrete slabs and walls.”
From location to infrastructure to cost savings, there are many factors that make for a sound first-time industrial real estate investment. Be sure your property has the right mix of ingredients by talking to an experienced agent.