Is a warehouse space worth investing in?

By Greg Bell

If you're thinking of buying an industrial warehousing space as your next commercial property purchase, it might not always be easy to determine whether that will be a good investment. While the rise of e-commerce and rapid shipping has created some significant demand, that demand is pushing prices higher.

As such, you will likely have to have a sizable deposit in place before you can even think of purchasing such a property, but things are certainly trending in an encouraging direction, according to Commercial Real Estate. While many segments of the real estate sector were negatively impacted by the COVID-19 pandemic, that just wasn't the case for warehousing.

What's going on?

When the outbreak first began, commercial leasing for all types of properties slowed considerably, but warehousing rebounded quickly because it became apparent that shipping would be a critical lifeline for millions of Australians during this time. However, because of the financial difficulties many companies or investors experienced over the past year, it's not necessarily going to be easy for everyone to compete with larger-scale market participants when it comes to bidding for such spaces. Smaller investors, therefore, would be wise to figure out exactly how much they are willing to pay for the right property.

Pros and cons to consider

As with any other strategic investment for a company, you need to be sure you're aware of the pluses and minuses such a transaction could bring to you. Mac Rack notes that in addition to the high up-front costs, you might also need to invest in maintenance and upgrades for older facilities, but that buying comes with more contained and predictable ongoing costs.

Moreover, if you are buying to rent out the space, due to how much demand there is for such space these days (a trend that is only likely to continue), you should have no difficulties in finding a tenant and setting rents at competitive rates.

If you're thinking about buying a commercial property of any kind, either as an investment to rent out or for your own business, you need to have an experienced industry professional by your side. At Ray White Surfers Paradise, we can advise you on all the ins and outs of the sales process and ensure you're getting the best deal possible. Get in touch with us today to find out more about what we can do for you.

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