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Workers make way for cars and man caves

By Ryan Ellem on Jun 21 2017


Across Australia’s capital cities, smaller industrial premises are increasingly becoming used for ‘unproductive’ purposes: everything from professionals storing hard copy files to car enthusiasts securing their pride and joy.

Previously the home of owner-occupants and tenants such as dry cleaners, jewellery manufacturers, gourmet food producers and the like, smaller scale light industrial premises are now increasingly becoming used for non-business related storage.

While LJ Hooker Commercial has tapped into this emergent buyer base for clients, it also represents a wider challenge for growth corridors trying to sustain employment opportunities, said LJ Hooker’s Head of Commercial, Mathew Tiller.

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“Traditional light industrial tenants and owner-occupants are now competing against the increased personal wealth of individuals and professional service operators looking for supplementary space,” said Mr Tiller.

“For developers, the industrial sector is in heavy demand”. “Our network is fielding consistent enquiry from developers looking for those rare pockets of developable land or those that can be repositioned for small scale manufacturing.

“Owners of under-utilised industrial or land that can develop industrial are sitting in a prime position. There appears to be very little new industrial stock in the pipeline across many cities but especially Sydney.”

LJ Hooker Commercial Hornsby Principal Murray Byrnes said ‘about half the industrial properties’ his team had sold in the last 12 to 24 months have been for ‘no business-related purposes at all’. 

“These properties are going to Self-Managed Super Funds and many of these properties won’t see the market again for several years – maybe even a generation as they’re handed down to children,” said Mr Byrnes. “It means we’re now talking to an entirely different marketplace and have adapted our strategies to suit that. Especially for our clients looking to divest, there’s a whole new non-traditional buyer subset looking to purchase not for employment, but for storage purposes. 

“This new trend is creating significant pressure on prices and forcing many to look at alternative areas. 

“There’s no new industrial being built – all developable options have been exhausted. The State Government has instructed councils in growth corridors like ours to lift densities around transport nodes. Encouraging a greater population base is good for the area, but there needs to be a platform for employment generation to accompany the residential expansion, or it won’t work as effectively.

“We need the planning framework to encourage more employment generating industrial developments.”

In Sydney’s west, LJ Hooker Commercial Penrith Managing Director David Reardon has seen a similar trend. 

“Professionals like lawyers and accountants are starting to use small light industrial premises for document storage,” he said.

“We’ve also seen clients buy them to store their cars, leaving them idle in there and taking them out once a month, and even juke boxes. Light industrial has become a home for hobbies – getting all the toys and tools out of the home garage and backyard and into a dedicated storage space.”

Mr Reardon said while the future Badgerys Creek airport would be the catalyst for future industrial development, there simply wasn’t a viable amount of smaller, business-oriented premises available, in the immediate term.

“Around the 120sqm-180sqm size, affordability kicks in and we’re seeing less and less productive uses – no small-scale manufacturers or anything like that. 

“We recently listed 29 industrial lots off the plan for a publicly-listed developer which sold out all but one in four months because the demand for land is that great. Buyers intend to set-up service stations, factory units and child care centres in there.

“We know of many owners with developable land and many developers are wanting introductions to service the demand from businesses. Developers know councils are wanting greater residential mass, but there is not a sustainable amount of employment-generating development to meet the increased population.”

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