The industrial property sector for SME owner occupiers and investors continues to deliver in 2017, according to leading industrial property players Bawdens Industrial.
Directors Robert Ally and Terry Saba said that beginning in 2016 values began increasing at a rate well above the long term trends.
They said as Sydney’s GDP had continued its healthy growth rate, supported by a residential development cycle that had been underway since 2012, and the added stimulus of $68 Billion of infrastructure to be spent through to 2022 to 2023, these factors combined had produced demand from businesses looking for space in Sydney.
“This demand is occurring at a time when no new property has been constructed since 2009,” Ally and Saba said.
In a research paper recently released to clients, Bawdens said that demand had resulted in prices increasing in excess of 35% since July 2016 for property with a value less than $3,000,000.
They said that SME demand was not likely to be affected by the arrival of Amazon in Australia as the sectors services were not directly aligned with Amazon’s consumer services, but more so to business to business services.
Ally and Saba explained that in completing a May research survey of SMEs, they found that many companies were increasingly realising that being their own landlord was a natural hedge against inflation.
“This is because when values rise to a point which does not make capital investment the best option, SMEs will choose to rent,” they said.
Bawdens added that increasing rentals were expected to be passed on by SMEs due to increased prices, however the increase in income for landlords was expected to offset any expectant commercial property inflation.
A modern office/warehouse in a prestigious industrial estate in the inner bayside Melbourne suburb of Port Melbourne has been sold by Ray White Commercial Oakleigh for $1,462,500.
The tenanted approximately 360 sqm facility at B1/8 Rogers Street, Port Melbourne, was sold to an owner-occupier by Paul Rizzo and Joshua Colosimo of Ray White Commercial Oakleigh on behalf of a private seller on a yield of 5.2 per cent.
Mr Rizzo said the property was initially taken to auction and passed-in on the day for $1.4 million.
“We continued negotiations with interested parties for this property and have now achieved a sale price of $1,472,500 which was $12,500 above the vendor’s reserve,” he said.
“The buyer will owner-occupy the warehouse facility when the tenant’s lease expires at the end of the year. The property is currently leased for gross rental of $75,790 per annum.”
Mr Colosimo said the property comprised an approximately 210 sqm warehouse and a 150 sqm office with kitchen and staff amenities plus parking for eight cars.
“This was an immaculate property which was ideally located a mere 3.5km from the Melbourne CBD,” he added.