New ‘Sheds' Deliver The Goods

Online shopping a windfall for investors in industrial assets such as warehouses.

- Pam Walkley

Industrial property is hot, providing a bonanza for some investors in the sector. It’s not traditional sheds that’s driving the sector, but huge, sleek and super-efficient logistic centres and warehouses.

We may no longer manufacture much in this country, but we have embraced online shopping with enthusiasm, sparking demand for facilities such as Amazon’s 43,000sqm centre at Moorebank, Sydney.

“The industrial market is booming – it is arguably the best-performing property sector currently,” says the winter 2019 Australian Industrial Report from m3property Insight.

“Nationally over the past year prime net face rents [before any incentives] increased 3.8%, land values rose by a whopping 21.6% and prime yields firmed by 26 basis points to a new record low.”

Industrial property returned a total of 13% in the year to June 2019, topping the sector table, according to research from MSCI, which provides indexes, and the Australian Property Council. Healthcare came second, with a total return of 12.8%, and the office sector came in third at 11.6%. The retail sector bombed with a total return of only 3.7%.