High Demand vs. Low Supply

Thursday 16 July 2015

Written by Duarte Figueira

 

Industrial Property supply, mainly with demand to purchase in the Inner West of Sydney is slowly but surely drying up.

There is a huge demand from industrial investors in the $2mil to $5 mil price range per property. These investors have purchased property on investments yields as low as 5% or ($5,850,000) with a good example being the RMS (ex RTA) investment at 1-15 River Street, Silverwater.

Raine & Horne Commercial Olympic Park was invlolved in a transaction of an older style functional industrial building, which sold to an owner occupier at Derby Street, Silverwater for $3mil reflecting $2,000/m² for land and building.

There is very little currently available in the open market for sale, however there has been a number of "off" market transactions occuring and we believe this will be the main focus from many active agents.

The demand from this sector of the market continues with stock supply at its lowest since January 2015 until now.

The leasing of industrial property however, remains stable, with the majority of transactions being 300-1500m² and occupiers being from the service sector. The larger industrial properties, being 3,000-5,000m² are a little harder to lease e.g several properties located in Newington Street, Silverwater with over 20,000m² being available for over 12 months.

Industrial rents in the Inner West of Sydney are circa $100-135/m² net, depending on quality and functionality with a limited number of transactions occuring.

So, for now, supply of industrial property in the Inner West is limited, investment yields are very low and  demand in on the increase.

 

Click here for Industrial properties for Lease in the Inner West

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