The Industrial Sector’s Importance Within the Broader Economy Comes to the Fore
Amidst the turbulent conditions of the last three years, the industrial sector’s importance within the broader economy came to the fore.
Home to Australia’s distribution centres and inventory storage, warehouses with design efficiencies and easy access to road, rail and port, have been in high-demand throughout the disruption of the pandemic, global supply chain issues and the Ukraine conflict.
"The movement of goods and services, the logistics and warehousing of those products and their delivery, have all come to the forefront and become a very dominant part of the industrial sector.”
Occupiers have needed to get their products to retailers and consumers faster and more easily while investors have been clambering over the assets of the ‘new economy’, driving down yields across markets.
Tim Byrne, Co-Director of LJ Hooker Commercial Bankstown noted: “The demand for industrial assets is definitely driven by transport and logistics companies as well as online retailers with their fulfilment centres and last mile logistics hubs”.
While the Amazons and major pharmaceutical companies of the world grab the headlines for pre-commitments to 20,000sqm plus warehouse developments in the nation’s chief industrial corridors, there’s been even more activity in the small business sector – the engine room of the economy.
Factory unit construction underwent a renaissance over the near zero cash rate period. Family-owned businesses – from signwriters to joineries, auto-electricians to breweries – have been staking out new opportunities in the suburbs.
“The significant area of demand has been 5,000sqm and under for sales and leasing of industrial buildings,” said Manoli Nicolas, Senior Sales and Leasing Manager at LJ Hooker Commercial Brisbane.
“We’ve seen a substantial increase in the sale price of small strata industrial units less than 1,000sqm (in size) and also an increase of 30-40% in rental rates for small strata units.”
Expectedly, vacancy rates for the spectrum of industrial assets across Australia during the exit from Covid have been exceptionally tight.
Demand alone, however, hasn’t guaranteed landlords an easy outcome. It’s important that investors understand that finding a good tenant is worth the time and effort through longer lease security and less ongoing issues.
Mr Byrne said the management of industrial assets is seen more, now, as a two-way street: a collaboration between the landlord and the tenant.
“This can be seen as early as the initial design and construction of the asset to suit the tenant’s needs, through to the proactive management of the asset to ensure costs are kept minimal for the tenant,” he said.
LJ Hooker Commercial’s network of offices are expert managers of the critical relationship between investors and their tenants. Our specialists go far beyond simply collecting rental payments; we advise on everything that can add real value to the asset and attract a long-term, premium tenant.
Our specialists also have the expertise to be trusted advisers for their clients.
“As commercial property specialists, we engage with our clients’ wider panel of advisors on a regular basis,” said Mr Byrne.
“From accountants, with the regular supply of financial documents, to their lawyers – with discussion on terms and leases of contracts – with the ultimate outcome of the best result for our clients.”
Across Australia, the LJ Hooker Commercial network works collaboratively to open up more opportunities to our clients through shared knowledge and connections.
The relationships between LJ Hooker Commercial’s office underpinned a culture of commitment to clients, said Mr Blanch.
“LJ Hooker Commercial has something which is quite unique - focused marketing area specialists,” said Mr Blanch.
“As well as industrial, our specialists know office and retail in every region. We provide clients with targeted recommendations and informed opinions about what values are at any given point in time, across the whole spectrum of commercial property.”
If you’re looking for expert insights into the worth of your commercial property in your local market or want to know what comparable properties are aching in rent, contact your local LJ Hooker Commercial specialist today.