We've all seen the countless articles over the last few years shouting the benefits of investing in the Australian property market. However, most of these pieces focus almost exclusively on residential property, with a few also including commercial properties for retail businesses.
The elephant in the room here is industrial property, which can be just as smart an investment for savvy buyers.
As with many types of investment, one of the most important aspects of buying real estate is understanding how much of a return a property will provide. Industrial locations often come out ahead here, with rents typically measured by physical floor space, rather than being based on a range of market conditions. According to Real Commercial News, this leads to annual yields of roughly 8 per cent, compared to 4-5 per cent for other properties. The result is that an investment in industrial property is likely to pay for itself in a shorter period of time.
Another core benefit to industrial properties is that they tend to be rented out on far longer leases than residential or commercial real estate (up to 10 years in some cases). This provides an added layer of security for you as the property's owner, reducing the potential for regular periods of vacancy while trying to find a tenant every few years.
For many tenants, the appeal of an industrial property will be the ability to work in a different way to other spaces. This is particularly true for any company with a manufacturing component to their work, as inner-city commercial buildings will often be subject to strict rules and regulations. A few examples of this are restrictions on excessive noise and bans on the use of certain chemicals in areas that aren't zoned for industrial work. Accordingly, make sure to do your research before buying and ensure an industrial space truly is zoned appropriately for your tenants' needs.
Finally, even though there are all sorts of different benefits to investing in industrial property, there are some risks that need to be understood and accounted for. The most important of these is market volatility, which can lead to manufacturing companies – or any other business that requires an industrial space – closing down. To make sure your property isn't affected by these situations, it's vital to find a space that is suitable for as wide a range of organisations as possible. That way, you can rest easy knowing there will always be demand for your industrial property.
If an industrial property sounds like an investment you'd be interested, contact the team at Ray White Commercial Gold Coast to talk about your options.
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