Industrial property accounts for a huge amount of commercial real estate investment in Australia.
Investors who have traditionally used residential property and shares in their retirement strategy or investment portfolio are turning to the high yields of industrial commercial real estate. This can be seen in the number of institutional investors participating in industrial property investment. Only 9% of industrial property transactions were from institutional money in 2009. By 2018, institutional investors contributed to 49% of all industrial property purchases.
Typically, industrial properties are tenanted by logistics companies, factory users and manufacturers, wholesalers, warehouse users, and distributors. 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 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.