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Industrial property accounts for a huge amount of commercial real estate investment in Australia with over $6 billion transacted nationally in 2017. Typically, these are classed as assets tenanted by manufacturers, wholesalers, warehouse users, and distributors.
Typical tenants of industrial properties will pay particular favour to:
- Proximity to major transport links and arterial roads – These businesses are often distributing to retailers so require convenient access to highways and freeways in order to keep transportation costs low.
- Suitable ratio of warehouse to hardstand – Also known as site coverage, industrial real estate typically has a greater land component dedicated to hardstand and yard space (and less dedicated to buildings). This will typically suit such common tenants as steel manufacturers, who will have a large amount of material and stock to be stored outdoors.
- Easy accessibility, for trucks and large vehicles.
- Large and wide roads to accommodate heavy vehicles.
- Significant roof and gantry height.
Purchasing industrial assets with adaptable building space also increases the likelihood to meet tenant demands. On the other hand, specialised properties containing niche infrastructure (like gantry cranes or cold storage) may appeal to specialised operators who are unlikely to relocate due to difficulty and expensive fit-out.
Investors who have traditionally used residential property and shares in their retirement strategy are turning to the high yields of commercial property. Specifically, Australia’s strong manufacturing culture and bolstering logistics industry is improving the relevance and demand of industrial property investment.
Considering the substantial purchase price of industrial property, many investors participate in these investments alongside a commercial property syndicator. This allows individual investors to participate in industrial real estate investments of a much higher value than otherwise possible.
For more information on how to join our next industrial property investment, get in touch with Properties & Pathways. We invest alongside you.