The Benefits Of Industrial Property Investment and What To Consider

Given the current market and its uncertainty, many investors and developers are looking to diversify their portfolio towards defensive investment with a strong emphasis on industrial property.

There are a number of benefits to investing in the commercial and industrial property including

  • Leverage
  • Strong returns
  • Stability of income
  • Lower risk in comparison to other sectors
  • Exposure to different sectors of the economy
  • Tax benefits
  • Investment control

A complex understanding of several factors including financing, property management, leasing and the understanding of potential risks is involved in successful commercial and industrial property investment.

COVID-19 has significantly affected our economy and certain sectors of the commercial market including retail and office space. Although these remain volatile the need for customer shopping experiences and employee interaction for company culture and ethos will never diminish. There may be a temporary reduction in the desire to invest in these sectors, however, this will shift as the workplace and retail experience evolve to accommodate the new demands of the workforce and customer.

In the industrial sector, warehousing space has grown in demand and is seeing many investors seeking large land in logistical locations to accommodate the expansion of logistics, medical and healthcare requirements.

There has been a shift in the Australian Industrial market. Manufacturing has gone offshore as importing becomes more economical (however COVID-19 has made us reconsider this move). This means that the design of these buildings has changed to include the ability to store and move goods and services. Industrial buildings are now designed to have:

  1. Larger area with higher ceilings for better storage capacity
  2. A higher component of embedded technology to allow for automated operations
  3. Stronger and more durable concrete floors to accommodate taller pallet racking and heavier duty forklifts and crane facilities.
  4. More access with increased number of roller doors so that loading and unloading can happen at the same time.
  5. Greater space to accommodate truck maneuvering and container set down and storage.

As we see this shift in design, many older warehouse buildings have become outdated and unsuitable to the needs of the larger industrial tenant.

As businesses who outgrow these facilities expand into larger more suitable industrial buildings. Smaller businesses that do not require these features become more suited to the smaller premises.

Taking these differences in tenants into consideration it is important to provide a flexible facility that has the ability to expand or be reconfigured internally to accommodate the growth of businesses within this sector.

Therefore when looking to invest or develop industrial property there are a few points to consider to ensure a good industrial investment.

  1. Many industrial properties require access to freeways and the ability to logistically move product or services easily. Find a location that has accessibility.
  2. Onsite parking needs to be adequate for staffing and visitors
  3. Access for large trucks with containers needs to be sufficient
  4. Staff amenities need to be clean, accommodating and comfortable. Consider items such as air conditioning in office spaces, decent kitchenette and toilets are important.
  5. Flexibility to allow for changes in office and showroom configuration.
  6. Decent roof height to allow for modern racking systems.If you are interested in expanding your portfolio or wishing to develop contact our team to discuss your next successful investment.

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