Peter Vines from Ray White Commercial talks all things about the Industrial market, buyers, and marketing.
Industrial properties, bit of a hot topic at the moment. Everybody seems to want some piece of industrial property. They do, and yields are very tight. Yeah, I guess what's the big attraction to industrial property now? Why is everybody wanting it? Look, I think there's a couple of reasons. There's been a huge removal of stock in areas like your South Sydney and back in, sort of, closer to the city. With regentrification, those spaces have turned into commercial office space or residential and so as a result, there's all these people who have substantial amounts of money who need to move their business further out and still be on the commuter lines. I also think with the rise of internet shopping there's people who need to be close back into the city to provide those services and that everybody wants things faster so they need to be able to service that. But the big thing is, in my opinion, is that you're buying land with holding income. Yeah, and I think that's a huge opportunity, is to have that cash flow over land. That's the ideal sort of investment. And typically with industrial, you're buying big tracks of land when you buy your industrial property. Yeah, and so that's what investors are after right? They're wanting some kind of form of income from something that they buy, is that what you're saying? Yeah, completely. And that's why residential land at the moment is more challenging because you can't realise the potential on it as quickly. People need to have that income to hold the land. Yep. I mean you're borrowing money from the bank. You need to be able to service that land. Or buy it at such a good price that you can afford to do that. Yeah. Let's say I'm a buyer at the moment. I guess, put yourself into a buying person's shoes. What do you want to invest in? I guess what do you like around Parramatta? And, I guess, maybe any tips for, kind of, buyers looking at some commercial property. Yep. So I am always looking at what something is but what it could be. Because you can't buy it on just what it is today. You need to, because of the yields that you're needing to buy something at, you need to have some sort of story as well as the long-term hold and capital growth, but there has to be some way of making the asset work harder and getting more out of that asset. I'm a big believer in looking to the future and while Parramatta is an area which has undergone substantial amounts of growth. I see huge opportunity in areas surrounding Parramatta, which will continue to service that area but also, you know, further afield like your Liverpool CBD which is going to be heavily driven by the Badgery's Creek Airport or Penrith. You know, I think those two opportunities, if somebody's looking at what Parramatta was, you know, ten, twenty years ago I would be looking at markets like that at the moment. Yep. I want to touch it on marketing. You know, I guess most real estate agents, when they talk about marketing they think about ‘its residential property' you know, and I guess what, kind of, marketing plan but how does it play out in the commercial space? And what are your views on, I guess, marketing a commercial property? Yeah. Look, I'm a massive believer in advertising a property, you know, buyers come to me all the time and say we want to buy stuff off-market. There's a reason why they want to buy off-market is because they're trying to make their money in the buying. Our whole thing is about creating competition and competition is created through a process and as part of that process, marketing is undertaken. In all honesty, you just don't know who your buyer is and you can have a really good idea, and you can go out to a whole lot of perspective parties, but you just, sometimes you find that rare buyer who you just don't know and that's really what you're looking for when you're doing it. As well as it allowing you to create that competition and competitive process.