Warehouses to boom amid online growth
Analysts said the growth in online retailing had led to an explosion in demand for storage and distribution warehouses.
According to Mark Courtney, director of research for industrial property at Colliers International, the national industrial property market is poised to embark on a new development cycle.
Mr Courtney said this was happening as traditional approaches to storage and distribution were being retired and the online juggernaut generated a new set of industrial accommodation opportunities.
"Consumers' love affair with online has transformed the logistics and retail warehousing sub-markets into the most sought after by institutional investors and tenants looking for greater efficiencies," Mr Courtney said.
"Opportunities to build larger warehouses and super-sized distribution centres in transport infrastructure rich hubs have strategically been seized upon, with listed property groups like Goodman, Dexus, Australand and Charter Hall leading the way and dominating the provision of new supply to the market.
"Melbourne's Derrimut, Laverton and Truganina, Sydney's Eastern Creek and Erskine Park."
One of the latest sales was by a private Melbourne investor who paid $27.5 million for an industrial unit and warehouse complex at Smeaton Grange in Sydney's south-west.
The selling agents, CBRE directors Angus Klem and Mick Ferreri, said demand was strong for the 1-11 Smeaton Grange Road property, which comprised six industrial units, ranging in size from 1143 square metres to 9138 sqm.
The property also includes two attached, high clearance, freehold title warehouses with offices.
Mr Klem said the complex was popular for its accessibility to the M5 motorway.
"The sale generated strong interest, with 13 bids - predominantly from high net worth individuals as well as a number of syndicators," Mr Klem said. "The strength of investor demand elevated the eventual sale price by $2 million during the second round of the expressions of interest campaign."
The complex has a weighted average lease expiry (WALE) of about six years. Mr Klem said it had a strong income stream and medium and long-term exit strategies.
It was sold on an initial yield of 10.8 per cent, which Mr Klem attributed to the property's location in a secondary but emerging industrial precinct and the relatively large size of the units.
Frequently Asked Questions about this Article…
The demand for industrial property is increasing due to the growth in online retailing, which has led to a surge in the need for storage and distribution warehouses.
The demand for industrial property is rising due to the growth in online retailing, which has increased the need for storage and distribution warehouses. This trend is transforming logistics and retail warehousing into highly sought-after sub-markets.
The online retail boom is transforming logistics and retail warehousing into highly sought-after investments, attracting institutional investors and tenants seeking greater efficiencies.
The online retail boom is driving an explosion in demand for storage and distribution warehouses, making them attractive investments. Institutional investors and tenants are seeking greater efficiencies, leading to a surge in interest in logistics and retail warehousing.
Investors have opportunities to build larger warehouses and super-sized distribution centers, especially in transport infrastructure-rich hubs, which are being strategically developed by leading property groups.
Investors have opportunities to build larger warehouses and super-sized distribution centers, especially in transport infrastructure-rich hubs. Listed property groups like Goodman, Dexus, Australand, and Charter Hall are leading the way in providing new supply to the market.
Listed property groups like Goodman, Dexus, Australand, and Charter Hall are leading the way in providing new supply to the industrial property market.
Areas such as Melbourne's Derrimut, Laverton, and Truganina, as well as Sydney's Eastern Creek and Erskine Park, are experiencing significant industrial property development due to their strategic locations and infrastructure.
The Smeaton Grange property is attractive due to its accessibility to the M5 motorway, strong investor demand, and a robust income stream with medium and long-term exit strategies.
The high sale price of the Smeaton Grange property was driven by strong investor demand, its accessibility to the M5 motorway, and the property's location in an emerging industrial precinct. The sale generated 13 bids, elevating the price by $2 million during the expressions of interest campaign.
The sale of the Smeaton Grange property generated strong interest with 13 bids, elevating the sale price by $2 million during the second round of the expressions of interest campaign.
A weighted average lease expiry (WALE) is significant in property investment as it indicates the average time remaining on leases across a property portfolio. A WALE of about six years, like in the Smeaton Grange complex, suggests a stable income stream and potential for medium and long-term exit strategies.
The Smeaton Grange property was sold on an initial yield of 10.8 percent, attributed to its location in an emerging industrial precinct and the relatively large size of the units.
Location significantly impacts the yield of an industrial property. For example, the Smeaton Grange complex was sold on an initial yield of 10.8% due to its location in a secondary but emerging industrial precinct, highlighting the importance of strategic positioning in investment returns.
The Smeaton Grange property has a weighted average lease expiry (WALE) of about six years, indicating a strong income stream and stability for investors.
Listed property groups like Goodman, Dexus, Australand, and Charter Hall play a crucial role in the industrial property market by leading the provision of new supply. They strategically seize opportunities to build larger warehouses and distribution centers, meeting the rising demand driven by online retail growth.
Call 1300 880 160
Start a chat
Schedule a call
