For starters investing in a smaller warehouse is considered an affordable entry-level investment – typically they are priced between $500,000 and $800,000 per unit, according to commercialrealestate.com.au
However, rather than the price, it’s the generous yields that a smaller warehouse can return, which attracts investors. For example, on the Central Coast of NSW, gross yields from residential investment properties can range from 3-4% compared to net yields of 6-8% for a small industrial unit, according to Raine & Horne Commercial Erina. The yields for a warehouse vary depending on the quality of the tenant, length of lease and the location.
But before you invest in a warehouse, it is an excellent idea to consider those features that will appeal to potential tenants such as the height of the warehouse. Known as the “clear height”, This is the distance between the floor and the ceiling. The clear height also accounts for fans and beams.
A loading dock is a must for a warehouse and is either located inside the warehouse or externally. It is usually preferable to have an external loading dock so the lessee will not be required to create a separate dock inside the warehouse that eats up valuable space.
When it comes to land area, generally it’s a case of more is best. Additional land offers the potential for extra storage or parking space.
Many warehouses will also include space for office activities. Generally, about 5% to 10% of the total area is acceptable for a dedicated office. However, some businesses need more office area and will fashion this space themselves at no additional cost to the owner. Better still, when lessees vacate the warehouse, the lessor will be left with more office space, which will improve the value of the property.
An industrial warehouse is usually a little more than a concrete shell made up of four walls. To this end, your four-walled investment will come with fewer management headaches, although any problems with the roof will require your financial attention.
The typical lease period is three to five years or even ten years in some cases for an industrial warehouse. Longer leases are preferred by investors looking for strong return on investment (ROI), and lessees searching to establish a location to grow their business.
If you are considering investing in a commercial property such as an industrial warehouse, contact your Raine & Horne Commercial for more information.