Why industrial warehouses are in demand right now

Why industrial warehouses are in demand right now

A key commercial trend we’re seeing in Mount Gambier at the moment is a lift in demand for industrial warehouses. This is due to a few factors, both local and national, and means that for investors looking to either invest or try something different, warehouse space is worth contemplating. And with Mount Gambier located almost exactly between Melbourne and Adelaide (both of which have very little availability) this trend shows no sign of slowing.

What are the reasons behind the growing demand?

There are two main reasons behind the rise. One, Mount Gambier is continuing to expand and this means growing interest in warehouses, workshops, showrooms and other spaces suitable for various businesses.

Secondly, supply chain disruptions are now familiar to everyone as a result of Covid, and the difficulty in getting stock to regional areas has meant that companies are choosing to create larger orders of stock and therefore requiring additional storage. As a recent example, we leased a large industrial warehouse to a national chain store similar to Harvey Norman that was seeking more regional storage, and then sold it on to an investor.

Recent border closures have also meant that some businesses operating across Victoria and South Australia needed a secondary base in South Australia so that they could continue their operations.

We recently sold a large industrial warehouse to an agricultural equipment sales and service business operating in regional Victoria that was looking to expand into South Australia, and also leased a smaller warehouse to a traffic control services business seeking a storage base in South Australia through the border closures.

While the pandemic may have made that decision to find a regional hub more urgent, it’s one that makes great sense for a lot of businesses, even when borders are open, and looks set to continue in tandem with the ever-soaring popularity of online shopping.

In terms of local demand, we’re finding that newcomers who choose Mount Gambier to start their business require both small and large industrial warehouses. We’ve seen this in two recent examples, where we leased warehouse/office properties to facilitate new business GSK Auto Care on the western side of town. This trend has also led to an uptick in industrial land sales, with multiple allotments sold to local tradespeople, again on the west side of town, to trade providers for the construction of workshops and show rooms.

With a recent report showing that national industrial vacancy rates are now at an incredible low of just 0.8 per cent, Australia’s industrial property market is “the tightest in the world.” And with e-commerce now a convenient part of daily life, and companies looking to minimise long-distance fuel costs, this demand for localised storage hubs shows no sign of slowing.

Why this is a great opportunity for owners and investors

As we’ve covered in an earlier article, industrial tenants tend to rent for the long term, and as such they make excellent tenants and offer a secure and stable income base for owners. With such demand, rents are predicted to rise significantly.

If you are interested in finding out more about the unique opportunities for investors now and in the future, please get in touch with the team today. We are always happy to hear from you.

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Call Herbert Commercial on 08 87 250 500 for a complimentary annual investment portfolio assessment. From this assessment, feedback may warrant the need to seek Herbert Commercial’s advice and expertise with formulating a plan to action restructuring or renegotiating the best lease scenario moving forward. We’re here to help.

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