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NEWS: Industrial Property in the Hawkesbury on the rise.

Demand for industrial property has increased markedly in the Hawkesbury following the residential lead. The different property asset classes have consistently followed each other over many years. Residential leads the way followed by retail, commercial and industrial in that order, when residential property goes up, rest assured 12 months later, industrial will follow, if it goes down the same principle will apply.

 

Whilst many businesses have been forced into restricted operations, there continues to be an underlying optimism that when this phase passes, they will share in the spoils of renewed economic activity.

 

Not long prior to the lockdowns, we noticed interest rates remaining at all-time lows. There has been a definite shift in demand from purchasers turning to industrial property assets as a viable investment. The fundamentals are excellent over the short to medium term with demand outstripping low levels of supply.

 

Underlying factors

• Continual developments in local infrastructure providing better access to motorways including the Bandon Road extension through Riverstone
• Limits on new industrial land releases
• Comparative affordability to other industrial areas in the region
• Work/life balance recalibration – business owners moving into the Hawkesbury enjoying its relaxed lifestyle and wanting to reduce travel times from home to work
• The development of new residential estates and popularity in areas including Pitt Town, McGraths Hill through to Box Hill
• Moving home based business into local warehouse accommodation

What does this look like in real terms?

The Hawkesbury industrial areas of Mulgrave, South Windsor and Richmond are the domain of well-established factories, many in excess of 20-30 years of age and ranging in building areas from 250sqm-3,000sqm. The majority of these are strata units ranging in size from 250-350sqm.

 

Traditionally this has been a good size for local businesses. Developers have supplied this product in recent years, but have since sold out. There is a trend where Hawkesbury businesses have grown since inception and their need for more space has driven them to look at other industrial locations away from the Hawkesbury. Alternatively,  they tack on another building in the same area even though this is not the preferred situation. Many expanding Hawkesbury-based businesses would love the opportunity to stay here and operate under one roof. Unfortunately, these opportunities are severely limited to existing buildings, which are in short supply.

 

Values

In the last 12 months, the price of new industrial properties sized between 250-350sqm has risen  from $2,650 to $3,200 per square metre – a 20% increase – with rentals moving from $120 to $140/sqm(n). A lot of this demand is coming from owner occupiers which is driving yields below 5%.

 

The general opinion from business owners is “Why would I pay someone else’s superannuation when I can now afford to pay my own?” They continue to feel optimistic that their property asset will grow in value over the longer-term horizon, normally around 10 years. This is the time they expect to remain there which sets a new precedent to the yield play that investors focus on in the short term.

 

 

Where are the opportunities?

With demand for industrial property on the way up, there are opportunities for both owners and buyers. To discuss where to find these opportunities, contact Thomas Muller on 0409 469 628.