Owner-occupier demand increases

Colliers’ industrial experts Sam Hammond and Hayden Dick told MHD the reasons why the industrial property market is seeing a surge in owner-occupier demand despite rising debt costs.

It notes businesses that are trying to secure their own premises and ensure long-term stability are driving this trend.

“We have been inundated with owner-occupier enquiries,” Colliers Director of Industrial, WA Sam Hammond says.

“In addition, with rents growing by more than 35 per cent over the past two years, some occupiers are looking to avoid further rental increases by buying a facility.”

Sam Hammond, Colliers Director of Industrial, WA.
Sam Hammond, Colliers Director of Industrial, WA.

The current economic climate has resulted in an increase in debt costs – notes Colliers – making it more difficult for businesses to secure financing for their operations. However, this has not deterred owner-occupiers from investing in industrial facilities.

The demand for such facilities has continued to grow, driven by the need for businesses to have a permanent base of operations.

“We are currently running a leasing campaign for 146 Maddington Road, Maddington, a brand new 15,000 sqm warehouse and logistics facility due for practical completion in Q1-2024,” says Colliers Manager of Industrial, WA Hayden Dick.

“We were surprised with the amount of groups reaching out and enquiring to purchase the asset when it was listed for lease. We believe this is from strong and sustained rental growth experienced over the last 24 months, with expectations of future rental growth and appreciation in capital values.”

Colliers’ industrial experts suggest this trend is also driven by the rising cost of renting industrial facilities. With rents increasing, businesses are finding it more cost-effective to buy their own premises. This not only provides long-term stability, but also allows businesses to build equity over time.

“Locally owned businesses we are dealing with have strong order books, which tend to underpin their investment appetite,” adds Hayden.

Local businesses in Western Australia continue to expand in the current environment and are now seeing a good opportunity to buy as there are fewer active participants in the market.

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