Warehouses include sites for manufacturers, wholesale, storage (including cold storage) and logistics. Industrial is appealing for many reasons including low maintenance, high demand, diverse range of budget to buy in. They appeal to SME's, wholesalers, tradies, to E-commerce businesses and hobbyists depending on size. Here are 5 points to set yourself up for success when investing in commercial property:
Don’t be deterred from strata developments with warehouses. Unlike strata in residential, warehouses still have a decent land component and land appreciates. Review the body corporate fee and the key is to buy assets that will attract demand from tenants.
If you’re buying in a business park or strata, particularly the newer ones, research the developers to ensure the quality of estate and buildings. Look for the amount of parking on title, parking on common property, size of roads within the estate to allow for different size vehicles and turning circles. Consider the entry into the area. Is it a high traffic highway or road which will impact vehicles entering and leaving? Is it in a thoroughfare? Who are the neighbours? What's the pollution, and noise level like in the area? Also buying strata, which way is the roller door facing - this may impact heating up during summer. Make sure the site is appealing to tenants.
Buy in an established or growing area. I would go infill rather than greenfield to maintain as much capital growth as possible. Check infrastructure spending in the area and population growth. Generally speaking where there's an increase in the residential population there’s an increase in commercial to service the growth in population.
If it’s freehold you’re buying, check the zoning and parking in the area to make sure it’s attractive for suppliers and customers to reach you. Zoning will help influence the types of businesses the building will attract.
Quality of building. What level of work will be needed for repairs, compliance or to attract new tenants? Big ticket items are the roof and structural, make sure you have a building report as part of your due diligence. If you want to attract certain businesses, ensure the building can accommodate and is appealing. Think like a tenant, evaluate like an investor.
As always, check the lease in place if you're buying with a tenancy agreement. Bear in mind in this current economic climate (July 2024) if you’re purchasing vacant, you may experience 3 months + before you find a tenant due to the influx of builds completed post COVID, although in good areas this is anticipated to stabilise over the next few months
