At a glance

• Navigate risks with expertise: Trust Just Commercial to guide you through the complexities of industrial property investment.
• Capitalise on promising opportunities: Identify strategic locations, adaptive reuse projects, and emerging trends for maximum returns.
• Secure long-term success: With Just Commercial’s tailored solutions and proactive strategies, unlock the full potential of industrial property investment.

 

Industrial property presents investors with unique opportunities for both substantial rewards and significant risks. As an integral component of the real estate market, industrial properties encompass warehouses, factories, distribution centres, and manufacturing facilities.

In the Australian market, particularly in the vibrant landscape of Melbourne’s South East, the demand for industrial real estate for sale or lease is robust, driven by various factors such as population growth, urbanisation, and the evolution of e-commerce.

At Just Commercial, our expertise lies in navigating the intricate realm of industrial property investment, providing our clients with tailored solutions to capitalise on promising opportunities while mitigating potential pitfalls.

Through this comprehensive guide, we will delve into the intricacies of investing in industrial property, exploring the key factors that influence success and offering invaluable insights on identifying lucrative ventures in the dynamic Australian market.

 

Navigating the Risks of Industrial Property Investment

 

Investing in industrial property offers lucrative prospects, but it also comes with a set of inherent risks that demand careful consideration and strategic planning.

 

Higher Initial Investment

 

One of the primary challenges of investing in industrial property is the substantial initial investment required. Unlike residential properties, industrial real estate for sale often commands a higher price tag due to factors such as size, location, and specialised infrastructure. This can pose a barrier to entry for some investors, necessitating thorough financial planning and access to adequate capital.

At Just Commercial, our team of experts assists clients in navigating these economic considerations, offering tailored solutions and leveraging our extensive network to identify investment opportunities that align with their budgetary constraints and long-term goals.

 

Specialised Knowledge Needed

 

Another risk inherent in industrial property investment is the need for specialised knowledge and expertise. Unlike other sectors of the real estate market, industrial properties come with unique requirements and considerations, ranging from zoning regulations to environmental compliance and logistical infrastructure.

Investors must possess a deep understanding of these nuances to assess the viability of potential investments accurately. Just Commercial’s seasoned professionals boast extensive experience in the industrial real estate market, offering unparalleled insights and guidance to clients seeking to navigate the complexities of property acquisition and management.

 

Tenant-Specific Risks

 

Tenant turnover and occupancy rates are critical factors that can significantly impact the profitability of industrial property investments. Tenant-specific risks, such as insolvency or operational challenges faced by lessees, pose a threat to rental income and property value. Additionally, fluctuations in market demand and shifts in industry dynamics can affect the attractiveness of industrial properties to potential tenants.

Through our comprehensive tenant screening processes and proactive management strategies, Just Commercial assists clients in mitigating these risks, ensuring stable cash flows and maximising the long-term value of their investments.

 

Economic Sensitivity

 

Industrial property investments are inherently sensitive to economic fluctuations and broader market trends. Changes in economic conditions, such as shifts in supply chain dynamics or fluctuations in consumer demand, can impact the demand for industrial space and rental rates. Moreover, industrial properties are often closely tied to specific industries, making them vulnerable to sector-specific downturns.

To address these challenges, investors should focus on up-to-date market analyses and trend forecasts, which will enable them to adapt their investment strategies and capitalise on emerging opportunities.

 

Maintenance and Operational Costs

 

Maintaining and operating industrial properties entail significant expenses, including routine maintenance, repairs, and utility costs. Investors must budget accordingly to cover these ongoing expenditures and ensure the optimal performance of their assets. Additionally, unforeseen maintenance issues or regulatory compliance requirements can impose additional financial burdens and disrupt cash flow.

 

Unlocking the Rewards of Industrial Property Investment

 

Investing in industrial property offers an array of compelling benefits that appeal to savvy investors seeking stable income streams, long-term growth potential, and portfolio diversification.

 

Steady Income Source

 

Industrial properties are renowned for their ability to generate consistent and reliable rental income. Unlike other commercial real estate sectors, such as retail or hospitality, industrial leases typically feature longer lease terms and stable tenants, providing investors with a steady stream of rental revenue. This predictable cash flow serves as a cornerstone of industrial property investment, offering financial stability and resilience in varying market conditions.

To make the most of your investment, work with industrial real estate agents who can help identify high-quality tenants and negotiate favourable lease terms, ensuring you enjoy robust and sustainable income streams from their industrial assets.

 

Long Term Lease

 

One key attraction of investing in industrial property is the prevalence of long-term lease agreements. Industrial tenants often seek stable, secure premises to support their operations, leading to extended lease terms that can span multiple years or even decades.

These extended leases provide investors with greater predictability and continuity, minimising vacancy risks and reducing the administrative burden associated with frequent tenant turnover.

At Just Commercial, we specialise in facilitating long-term lease agreements that benefit both landlords and tenants, fostering mutually beneficial relationships and enhancing the stability of industrial property investments.

 

Potential for Appreciation

 

Industrial properties have demonstrated a strong track record of capital appreciation over the long term, driven by factors such as infrastructure development, population growth, and increasing demand for logistics and warehousing facilities.

As one of Melbourne’s leading industrial real estate agents, Just Commercial possesses unparalleled market insights and foresight, enabling us to identify emerging growth corridors and investment opportunities with significant appreciation potential. Whether through strategic acquisitions, value-added initiatives, or proactive asset management, we empower our clients to capitalise on the upward trajectory of industrial property values and achieve exceptional returns on their investments.

 

Diverse Investment Options

 

Industrial property investment offers a diverse range of options to suit investors’ preferences and risk profiles. From traditional warehouses and distribution centres to specialised facilities such as cold storage units and manufacturing plants, industrial properties encompass a broad spectrum of asset types and investment strategies.

This diversity allows investors to tailor their portfolios to align with their investment objectives, whether seeking stable income, capital appreciation, or portfolio diversification.

 

Limited Tenant Turnover

 

Unlike the retail or office sectors, which may experience higher tenant turnover rates, industrial properties typically exhibit lower vacancy rates and more excellent tenant retention. Industrial tenants often establish long-term relationships with landlords, benefiting from the strategic location, functional design, and operational efficiencies of their leased premises. This limited tenant turnover translates to reduced leasing costs, lower vacancy risk, and enhanced income stability for industrial property investors.

 

Identifying Promising Opportunities in Industrial Property Investment

 

In a competitive market like the industrial property market, identifying promising opportunities requires a strategic approach, informed decision-making, and a thorough understanding of market trends and dynamics.

 

Location, Location, Location

 

One of the most critical factors in identifying promising industrial property opportunities is location. Strategic positioning within crucial logistics hubs, transportation networks, and growth corridors can significantly enhance the desirability and value of industrial assets.

Proximity to major highways, arterial roads, ports, and urban centres facilitates efficient distribution and access to markets, making properties in these prime locations highly sought after by tenants and investors alike.

Just Commercial can help you identify strategic locations with high growth potential and guide you toward opportunities that offer optimal connectivity, accessibility, and long-term appreciation prospects.

 

Adaptive Reuse and Redevelopment

 

In addition to traditional industrial properties, opportunities for investment may also arise from adaptive reuse and redevelopment projects. As urbanisation and demographic shifts reshape the built environment, obsolete industrial facilities present opportunities for repurposing into mixed-use developments, creative workspaces, or alternative asset classes.

By leveraging our expertise in property development and market analysis, you can identify underutilised properties with redevelopment potential. We can also guide our clients through the planning and approval process to unlock value and maximise returns on investment.

 

Emerging Trends and Industry Dynamics

 

Staying abreast of emerging trends and industry dynamics is essential for identifying promising opportunities in industrial property investment. Shifts in consumer behaviour, technological advancements, and supply chain logistics can create demand for specialised industrial facilities, such as fulfilment centres, data centres, and advanced manufacturing facilities.

By monitoring market trends and anticipating future demand drivers, investors can position themselves ahead of the curve and capitalise on emerging opportunities in niche sectors.

 

Value-Add Strategies

 

Investors can also identify promising opportunities in industrial property through value-add strategies that capitalise on inefficiencies or underutilised assets. Value-add initiatives such as property renovations, infrastructure upgrades, and lease renegotiations can enhance the income-generating potential and overall value of industrial properties, thereby increasing investor returns.

You can rely on Just Commercial’s tailored advisory and asset management services to help you identify value-added opportunities, implement strategic enhancements, and optimise the performance of your industrial property portfolios.

 

In conclusion, by understanding and mitigating risks, leveraging emerging opportunities, and staying ahead of market trends, investors can unlock the full potential of industrial property investment. Whether seeking steady income streams, long-term growth, or portfolio diversification, we empower our clients to navigate the intricacies of industrial property investment with confidence and achieve their financial goals.

With our unwavering dedication and industry-leading insights, investors can capitalise on the promising opportunities that await in the vibrant landscape of industrial real estate.

The potential for substantial rewards is matched only by the inherent risks and complexities. As trusted industrial real estate agents in Melbourne, Just Commercial remains committed to guiding investors toward success by providing unparalleled expertise, personalised service, and innovative solutions.

 

 

At a glance

• Explore Southeast Melbourne’s top industrial property markets, including Dandenong, Moorabbin, Cheltenham, Oakleigh, Keysborough, Springvale, and Mulgrave.
• Just Commercial helps navigate these thriving markets and discover prime industrial real estate opportunities with expert guidance for investors seeking success in Southeast Melbourne.

Nestled in the heart of Victoria, the South-eastern region of Melbourne boasts a thriving industrial landscape that continues to attract investors, businesses, and entrepreneurs alike.

If you’re looking for prime industrial real estate opportunities, you’re in the right place. Just Commercial, your trusted partner in navigating the dynamic world of industrial property, is here to guide you through the most promising markets in this vibrant part of Melbourne.

In this blog post, we’ll take you on a journey through the top industrial property markets in Southeast Melbourne, unveiling the hidden gems and investment hotspots that await those seeking to establish or expand their commercial ventures in this thriving region.

Dandenong’s Industrial Real Estate

Dandenong, strategically located just 30 kilometres southeast of Melbourne’s central business district, is a standout choice for property investors.

Its exceptional access via the Monash Freeway and EastLink connects swiftly to Melbourne’s core and the Port of Melbourne, perfect for logistics and distribution.

The suburb’s industrial diversity, highlighted by a robust manufacturing sector, ensures a stable tenant base and long-term investment viability.

The industrial real estate in Dandenong stands out as one of the nation’s most tightly held industrial markets, where property availability is notably limited. This scarcity suggests potential asset appreciation and points to a market characterised by competitive demand, a boon for investors seeking robust rental incomes.

Furthermore, Dandenong’s appeal is bolstered by the pioneering Dandenong Logis Estate, Victoria’s first eco-industrial business park, promoting sustainability and aligning with modern environmental trends.

With low vacancy rates and established tenants like Startrack, Spicer Paper, and Ego Pharmaceuticals, Dandenong is a top choice for industrial property investors.

Moorabbin’s Industrial Real Estate

Moorabbin stands out as an appealing suburb for industrial property investors, boasting a combination of strategic advantages and robust economic fundamentals.

Moorabbin’s key allure is its proximity, just 15 km southeast of Melbourne’s CBD, making it an ideal location for industrial investments due to its closeness to the metropolitan area.

This strategic proximity facilitates efficient access to a vast customer base within the city while also enabling streamlined distribution and logistics operations.

Furthermore, Moorabbin’s excellent transportation infrastructure enhances its appeal as an investment destination. The suburb is intricately connected to major road networks, including the Nepean Highway and the Moorabbin Bypass, ensuring seamless access for businesses engaged in logistics and distribution.

Notably, the presence of Moorabbin Airport in the vicinity further amplifies its appeal, particularly for companies with aviation-related activities.

This well-developed infrastructure benefits existing businesses and underpins future growth and expansion potential, making Moorabbin a prime choice for industrial property investors.

The suburb’s diverse industrial base adds to the investment appeal of industrial real estate in Moorabbin. Moorabbin boasts a diverse industrial estate with many owners and tenants involved in wholesale activities, technical services, and construction and building services.

This diversity adds resilience and dynamism to the local industrial property market, attracting investors seeking a wide range of tenants. Moorabbin’s multifaceted industrial landscape maintains its vibrancy and appeal for investors capitalising on its strategic location.

Cheltenham’s Industrial Real Estate

Cheltenham, a suburb 18 km southeast of Melbourne’s Central Business District, emerges as an enticing commercial industrial property investment hub. Its strategic location, near the vibrant cities of Bayside and Kingston, adds to its appeal.

This adjacency to thriving local government areas, particularly Bayside, with a population exceeding 100 thousand, creates a robust consumer base for businesses operating in the suburb, making it an attractive prospect for industrial property investors.

Cheltenham is also home to the popular Westfield Southland shopping centre, primarily located in the northern part of the suburb. This presence not only enhances the convenience for residents but also provides opportunities for smaller retailers, banks, cafes, and various commercial enterprises to flourish in the area.

Cheltenham’s accessibility is bolstered by Cheltenham and Southland railway stations, ensuring smooth transportation for businesses and commuters.

The diverse commercial landscape, featuring businesses like Industrial Dynamics PTY LTD, Steel Foxy PTY LTD, and Quantum Technology PTY LTD, fosters a dynamic industrial ecosystem with various investment prospects.

With its strategic location, thriving local communities, and diverse business presence, Cheltenham is a prime choice for commercial and industrial property investors seeking a well-rounded investment opportunity in Melbourne, Victoria, Australia.

Oakleigh’s Industrial Real Estate

Oakleigh emerges as a compelling choice for industrial property investment, driven by a range of advantageous features. This suburb’s heart lies a large and historic Central Business District (CBD) spanning nine city blocks.

This bustling hub showcases several multi-storey office buildings, banks, and retail complexes and offers a vibrant atmosphere with numerous cafes, hotels, restaurants, and retail shops. This thriving CBD contributes to the local economy and is a magnet for businesses and potential tenants.

Strategically located between the Nepean and Princes Highway, Oakleigh provides easy access to key transport routes, including Warrigal Road, Huntingdale Road, Clayton Road, and North Road, facilitating efficient logistics and distribution.

The proximity to the Princes Highway allows swift connections to Melbourne’s CBD, while Oakleigh railway station offers suburban rail services.

Notably, Oakleigh boasts a diverse industrial landscape, with major industries such as Assa Abloy, a global leader in electronic and mechanical lock design and fabrication, calling the suburb home.

This presence of prominent industries underlines the area’s industrial viability and attractiveness for investors seeking a thriving and dynamic location for their industrial property investments.

Keysborough’s Industrial Real Estate

Keysborough, situated just 27 kilometres southeast of Melbourne’s Central Business District within the City of Greater Dandenong local government area, offers a strategic location that aligns with the diverse needs of its residents.

Families with children, professionals, and retirees call Keysborough home, creating a diverse and stable community that can provide a steady business customer base.

Furthermore, Keysborough boasts the convenience of the local Parkmore Shopping Centre, a bustling hub featuring banks, salons, travel agencies, grocery stores, cafes, and restaurants.

This thriving commercial centre enhances the local quality of life and serves as a magnet for businesses, further underlining the suburb’s potential as a commercial and industrial investment destination.

Additionally, Keysborough’s connectivity is a major draw for investors. It is seamlessly linked to neighbouring suburbs like Dandenong and Bangholme via the EastLink freeway.

Keysborough’s exceptional transportation infrastructure ensures efficient logistics and access for employees and customers. With its strategic location, diverse population, thriving commercial centre, and excellent connectivity, it’s a compelling choice for commercial industrial property investments.

Springvale’s Industrial Real Estate

Springvale is driven by a strategic blend of location advantages and a thriving business ecosystem. Springvale’s two railway stations, Springvale and Sandown Park, seamlessly connect to Melbourne’s rail network for transportation.

Additionally, Springvale benefits from Minaret College, the largest co-educational Islamic school in southeastern Melbourne, enhancing its educational landscape.

This attracts a diverse and skilled workforce to the area. Additionally, Springvale enjoys easy connectivity to the Melbourne CBD via the Monash Freeway, enhancing accessibility for businesses and ensuring efficient supply chain operations.

Furthermore, the suburb houses notable manufacturing giants such as MetalCorp Steel PTY LTD, Solenis Australia PTY LTD, and Asaleo Care Limited, underlining its status as an industrial hub.

This thriving industrial base, combined with its strategic location and accessibility, positions Springvale as a prime destination for commercial industrial property investment, promising opportunities for investors seeking a dynamic and well-connected business environment.

Mulgrave Industrial Real Estate 

Mulgrave, situated in Melbourne’s southeastern region within the City of Monash, offers compelling features that make it an excellent choice for commercial industrial property investment.

Its strategic location, just 25 km from Melbourne’s CBD, ensures easy access to the city’s heart via the nearby Monash Freeway, a vital transport corridor.

Additionally, the EastLink freeway provides a convenient link to the Mornington Peninsula and picturesque seaside towns, enhancing accessibility and potential market reach for businesses.

This suburb enjoys proximity to the upscale Chadstone Shopping Centre, boasting over 530 stores, including renowned luxury brands like Dior, Chanel, and Tiffany & Co. This adds to the local amenities and indicates a strong consumer base.

Mulgrave hosts diverse businesses, including manufacturing units such as DSM Limited, Mulgrave Machine Works LTD, East Coast Hydraulics, and recycling and auto service. Last but not least, the presence of the 45-acre Mulgrave Marine Industrial Park further underscores its suitability for industrial and commercial business activities, making it an ideal suburb for those looking to invest in Melbourne’s thriving industrial sector.

Click through to read more about this article on the Commercial Real Estate website.

With the outcome of the May 21 Federal Election now firmly resolved and with a new hand on the Commonwealth helm with confirmed majority control, we believe that the way forward is now much clearer.

The new Treasurer has identified a range of fundamental economic issues that need to be addressed. Australia’s accumulated national debt after the COVID responses being foremost.

Then there are the issues that need hands-on and effective government responses, including the level of inflation, interest rates, energy costs, employment opportunities, the revival of Australian manufacturing, and the focusing of technology on creating new, value-adding industries and businesses.

Although there may be interruptions in the application of solutions, we can see positives for the wider commercial and property market, especially since the elimination of some of the difficulties will alone be positive.

Australia’s new Treasurer is quoted in an article in the Australian Financial Review on May 25.

The article is headlined, “Chalmers plays down hopes of ‘quick fix’ to ills”.

It goes on to quote the Treasurer “I want to be honest and upfront about it. It will take some time for us to turn around these big challenges. I want to engage the Australian people in this big conversation about our national economic challenges.”

That seems to use to be the signal for business as usual with a flicker of optimism.

As specialist commercial and industrial property agents, Just Commercial is committed to working with our owners and tenants.

We are as close as the telephone and email, and we are available to talk at any time on any property matters which you may have.

 

When it comes to investment and savings, the property market has always been considered a safe option. This is particularly evident in the sector’s recent surpassing of $9 trillion as Australian’s continue to invest and benefit from commercial and residential property. Unfortunately, not all investors are educated on the hidden costs and taxes that could eat up their returns.

Capital gains tax (CGT) is one of these hidden elements and how much it can take from your return depends on a variety of factors. Since 1985, you have been required to pay a certain percentage as a levy to the Australian Tax Office (ATO) on the capital gain or profit in the year you sell or dispose of your assets. Assets can be house, land, shares, contractual rights, and collectibles above a specific value. 

There are a lot of factors that determine the amount you pay in capital gains taxes, but of these, the nature of your property is the most crucial factor. The ATO has well-founded reasons for this.

If you are short on time, here is the crux – you pay less or no capital gains tax for selling a residential property that has been or is your primary place of residence for a certain period. If you’re dealing in commercial real estate, you are paying taxes on your profits and the amount varies based on specific parameters. Capital gains tax is not a blanket taxation system, and you can benefit from knowing the details.

Residential Property and Capital Gains Tax:  

Any property zoned, used or intended as a dwelling for an individual, group, or family is considered a residential property. This can be a tract of land or building that is intended to be used as a place of residence by the owner or the tenant. Single, as well as multifamily unit apartments, are considered residential property.

You will be exempt from capital gains tax on the sale of a residential property if:

• You or your family live in it, your belongings are in it, your mailing and electoral roll address is assigned to it and it is connected to utilities such as phones, gas, and power.
• The property is not more than 2 hectares and is used primarily for residential purposes.
• You build a new house or renovate an existing one and live in it for three months within four years of purchasing it.
• You intend to buy a new property that will be your primary residence. To qualify for this exemption, you have to shift to the new home within six months and register it as your primary place of residence.
• You lived in the property continuously for at least three months in the 12 months before the sale.
• The property didn’t generate any rental income in the 12 months and it wasn’t your principal place of residence.
• You require full-time care and cannot live independently.
• You live elsewhere but retained the property as your primary residence.
• You lived there for three months and rented it out for up to six years as part of what is known as the six-year absence rule.
• You live elsewhere, but you have not earned from it.
• You live in it as your primary place of residence for the base period, renovate it and sell it.

You Are Not Exempt From Capital Gains Tax If:  

• Some portions of your home are rented out or used for income generation, like renting out through Airbnb, running your own small business, among others. You will be taxed for the period and the floor space the commercial venture occupies in your residence.
• But if you are living elsewhere and renting the entire property – you will be exempted from capital gains tax for six years because of the main residence exemption rule.

Commercial Property and Capital Gains Tax

Real estate properties that are used or intended to be used for business activities aimed at generating profits are known as commercial properties. Also known as investment or income properties, these include commercial properties and industrial properties.

The concept of capital gains tax on commercial properties is the same – you pay tax on the gains you make after deducting your base cost and maintenance costs. However, there are some key differences in both types of properties, and just like residential properties, there are some discount provisions for commercial property capital gains tax as well.

• Commercial properties are generally not exempt from tax though certain exemptions and discounts are available based on ownership and usage of the property.
• Unlike families, a company is not eligible for the 50 per cent discount on assets held for more than 12 months.
• Farms and home-based businesses are treated differently for tax purposes.
• If you are selling shops, factories, or offices, you might also have to pay GST unless it is sold as part of a GST-free sale.

Discounts and Offsets Available for Commercial Property:   

As said earlier, capital gains tax for commercial property varies from one to another depending on the way they are managed:

• If an individual or a trust owns the commercial property for over 12 months, they are eligible for a 50% capital gains tax exemption.
• If the commercial property is managed by self managed super funds, they are eligible for a 33% discount on the capital gains tax
• However, if a company owns the commercial property, it is not eligible for either of these exemptions.
• Small business owners can get exemptions as part of the ATO’s 5-year exemption, 50% active asset reduction, retirement exemption, and rollover when selling their own premises.  

Like any piece of accounting, calculating capital gains tax on residential property can be an arduous task. We advise you to talk with your accountant to access advice specific to your case and circumstances. With a combined experience of over 100 years, Just Commercial’s team of directors assist commercial and industrial property investors in making smart investment decisions. Get in touch with us to discuss how we can help you yield greater returns from your investment in commercial and industrial properties in Melbourne.

Off the back of 2020, a year of record low vacancy rates and record levels of industrial leasing activity, speculative industrial real estate projects along the east coast have now topped one million square meters.

Industrial property has been outdoing Australia’s hot housing sector, which is representative of what experts are calling the pandemic property market. While industrial property is dealing with record-low vacancies, the residential sector is seeing record high vacancies. A stark comparison of two markets within the same country.

The drive from the rise in online shopping flipped industrial property on its head, and as a result, a wall of institutional capital is looking for a way into the booming sector, with an unprecedented return of 23 per cent last financial year.

Nationally the vacancy rates for industrial and logistics facilities (greater than 5000 square metres) fell to 2.8 per cent in the third quarter of 2021, which is down from 5.1 per cent at the same time in 2020.

Australia’s hot housing market isn’t a patch on warehouse demand | @simonjohanson https://t.co/AUiuQgrlHL

— The Sydney Morning Herald (@smh) October 22, 2021

As a result of this limited supply of high-quality industrial properties, businesses that previously relied on housing development, are now turning around to develop and deliver modern, sustainable prime-grade industrial real estate assets.

In fact, this demand for industrial space is forecast to remain well above the long-term average over the next five years, with gross demand expected to exceed approximately 3.8 million square metres by 2024.

So, this has naturally led to more development projects in the works than ever before for the industrial market. Rising developer confidence is showing a sharp turnaround from last year when development projects were deferred due to uncertainty caused by the pandemic. This is why developers are now pushing to speed up the delivery of their new industrial assets and to keep up with the continuous demand.

In Sydney, more than 380,000 square metres of industrial developments are expected to be completed by next year, which is the highest level of industrial development in the area since 2008. While in Melbourne, almost 500,000 square metres of projected development are due to be completed.

More than half of the projected industrial developments being built in Melbourne are warehouses where construction has begun, with no tenants locked in. These will be especially important for an area where the vacancy rate for prime industrial real estate has fallen to just 1 per cent.

Now that there is much more stability throughout Australia’s largest capital cities, it is understandable that developers really want to speed up the construction of all of their new industrial developments. If the future projections are correct, it won’t necessarily matter if construction is completed in 2022, or 2024 the demand and low vacancy rates are still expected to stay put across Melbourne and Sydney.

Industrial property is currently the country’s most sought after property sector and is only expected to continue growing over the next five years.

So, will you be looking to get your hands on an industrial asset in the future?

The introduction of new technology creates a domino effect throughout almost every industry. Not many people are aware how new technology, such as electric cars and drone technology can actually impact something as seemingly far-fetched as industrial real estate.

However drone technology and the use of it for delivery services, influences the e-commerce sector and as a result impacts the industrial real estate sector.

Recently Vicinity Centres partnered with Google’s Wing delivery service, in a bid to be a global first in a way to deliver goods. The pilot scheme was launched from the rooftop of a Queensland mall, specifically the Grand Plaza in Logan, just south of Brisbane. This drone delivery service has actually shown some success and has now completed more than 2500 contactless deliveries to customers nearby.

Will other large players follow suit after Vicinity Centres move?

Drone technology is actually a great way to deliver goods, especially in the middle of a pandemic. As a result of the trial success, the Wing owned, Google parent Alphabet, has set up its own delivery hub in Canberra in a hope to expand the first of its kind mall-top service.

Vicinity Centres is the second largest listed owner of shopping centres in Australia. Which is why they are looking to expand the drone service to a plethora of other suburban shopping centres, who have plenty of airspace for drones to be able to run. Almost two-thirds of the population live within 30 minutes of one of Vicinity’s 61 shopping centres, making it the perfect group for drone delivery trials across the country.

What does the future of technology look like for the industrial industry?

This is all a result of the forever changing retail industry that needs to adapt to the future, especially with the hugely booming e-commerce sector. So, how does this new model of delivery impact industrial real estate?

This will impact the use of industrial warehouses for businesses as the future is heading towards a place where these drone deliveries won’t just occur from shopping centres, but straight from the warehouse fulfilment centres.

Future plans will lead to the advance of logistical hubs, and they will be both fulfilment centres, and delivery hubs. Just as the introduction of electric cars will do, drone technology will lead to the change of industrial real estate. It will eventually create a need for industrial property to accommodate drone technology, and upgrade properties as needed.

Owners of industrial property will continue to accommodate the future technological changes, including the adaption of drone technology and mixing logistics and fulfilment with delivery. In turn larger industrial hubs will be created in an effort to handle all the needs for e-commerce as it grows and changes.

Keeping on top of these trends is a vital aspect of both e-commerce and industrial real estate. There will be no-telling how drone technology will ultimately change delivery services and logistics, so don’t forget to always keep an eye on the trends for any further changes.

The current lockdown and border closures across Australia are impacting a vast range of businesses; however, it is only boosting Australia’s industrial property sector.

A massive boom in e-commerce and last-mile logistics is causing the need for  industrial property to cater to the resultant big-shed leasing frenzy. With warehouse construction at an all-time high, rising property prices and a shortage of industrial space, the industrial boom still has a long way to go.

The sheer weight of this market rests upon the shoulders of logistics and transportation, and any move in their market also impacts industrial property.

Logistics and transportation have been wrangling with the task of creating a more environmentally friendly, long-term business model for quite some time now. This includes the use of electric vehicles. So, naturally, the rise in electric vans and trucks is jarring the industrial property sector.

There are currently new fleets of electric vans and small electric trucks already on urban roads across the country. They are delivering anything from mail to furniture. However, the switch to electric vehicles has only just begun, and the current fleet is only making a dent in the overall electric vehicle goal of the transportation and logistics sector.

It isn’t a simple feat, but it is one of the goals of many transport companies who are looking to reduce their environmental footprints. As organisations, they have sustainability goals that they want to meet. These goals will gradually push their way into the industrial property sector.

One of these companies is Linfox. The Linfox executive chairman Peter Fox said, “The majority of Linfox’s carbon emissions comes from transportation tasks”. So, as they move towards their zero-emissions goal, they will need to change their fleets and ultimately become carbon emission friendly.

The current rise in the popularity of electric vehicles is not only a prominent topic for logistics and transportation. Throughout the industrial property sector, developers predict the inevitable future that they will need to meet the demands of environmentally conscious tenants.

Owners of industrial property will eventually need to accommodate the future environmental goals of their tenants. This means some properties will need an overhaul in terms of upgrades to accommodate these growing needs. While it may be a costly endeavour, what could cost developers and owners more would be if they were reluctant to the inevitable change and find themselves behind the trends when it’s too late.

Even changes to accommodate electric vehicles will be huge, from increasing power to sites and the space to fit charging stations. It won’t only involve the property owners but also electrical companies.

The government also understands the private sector plans for an increase in electric vehicles. A paper called the “Future Fuels Strategy” outlines the government’s plan of funding and grants to assist with the shift to electric vehicles. This includes co-investing with the private sector in regard to changing infrastructure, such as installing chargers on industrial properties.

The Victorian government specifically has also committed to increasing the number of fast chargers across Victoria, including rural areas to assist with transport and logistics.

While we all know change is on its way, there will be no telling the full-scale impact it will have industry-wide on industrial property and the market, until it happens.

Keeping ahead of these trends is vital, especially in a volatile industry such as industrial property. So, how do you think the rise in electric vehicles will impact the sector?