This article is from the Australian Property Journal archive
INCREASING numbers of private investors are flocking to commercial and industrial strata properties in Sydney’s city fringe, which is putting pressure on yields.
LJ Hooker Commercial agents Tom Barnier and Alex Bennett said prospective buyers are bidding up commercial and industrial strata prices throughout South Sydney as stock volumes tighten.
This is evidenced by a recent transaction, where a private investor purchased an industrial space in a complex in Marrickville’s Carrington Rd for $1.4 million on a net yield of 5.4%.
According to the agents, the price represented a new record sqm rate for the Marrickville industrial market of $4,714 per sqm.
“Around 60 parties made enquiries on the 297sqm high clearance warehouse,” they said.
Barnier and Bennett also recently sold a 76sqm strata office suite in the brand new Collins on Bourke development on Bourke Rd, representing $7,526 per sqm. The property is leased to Polar Electro Europe AG at $36,860 plus GST, reflecting a gross yield of 6.4%.
Barnier said the Marrickville sale underpins the competition for industrial assets in the tightly held city fringe.
“As industrial areas in fringe sites such as Green Square have been converted to residential developments, new premiums are being set for inner city warehouse stock.
“In the case of the Carrington Rd sale, the investor purchased at a record per sqm rates because he understood there is a huge shortage of industrial strata through the South Sydney corridor. The tenant is coming off-lease but that didn’t dissuade the purchaser,” he added.
Quality strata office space in the city’s fringe is also in demand as the supply pipeline of CBD stock constricts to its lowest point in almost 25 years.
“About two-thirds of the new office tenants in Sydney over the next two to three years will be converging on the fringe and suburban markets because of the lack of CBD stock,” Bennett said.
LJ Hooker Commercial’s Industrial Market Monitor forecasts Sydney’s industrial properties to rise 10% in value over the next two years, with prime yields firming 35 to 40 basis points.
Australian Property Journal
