TradeCoast is still the hub of activity when it comes to the sale and leasing of micro warehouses, with their price points and professional and leisure uses likely to keep capital values steady in 2019, according to Ray White’s latest Between the Lines* research.
The assets, previously known as industrial units but now known as micro warehouses, are slightly smaller in the sub 250sq m size range and offer some more ‘funky’ fit-outs.
Ray White’s Head of Research Vanessa Rader said the micro warehouse asset class has had a rapid rise over the past couple of years but continued success could face some obstacles in the new year.
“Around the TradeCoast region there has been high interest for these small, affordable assets, particularly during these times of low interest rates and the benefits which have been on offer to purchase via a SMSF,” Ms Rader said.
“With financing now becoming a little more difficult, there may be some hurdles to overcome for these assets into 2019.
“While capital values have increased rapidly over the past two years, driven by high demand and the reduction in unit size, the slowdown in development of these assets will likely keep these values stable at these elevated rates, with land remaining scarce.”
Ray White Commercial TradeCoast Industrial Sales and Leasing Manager Jared Doyle said the phenomenon of micro warehouses isn’t new, but the development of fun and vibrant, small industrial spaces over the last few years to cater for this new use has been one to watch.
“The volume of sales prior to 2018 have continued at a low rate less than $4M p.a., however in the three quarters of 2018, this level of investment grew to $10.218M,” Mr Doyle said.
“While this is 178.21 per cent up on the full 2017 year, this value amount remains low compared to larger industrial stock in the area.
“The average sale price of these assets was $330,000 in 2018**, making them an affordable method of entering the commercial market, or alternative to renting if used for a part business use.”
Ray White Commercial TradeCoast Sales and Leasing Executive Jack Gwyn said while volumes have been limited in the years prior to 2018, there has been a significant change in the values achievable for those purpose-built micro warehouse facilities across the TradeCoast.
“In the period from 2014 to 2016 there was some change in the size and price-points on offer with many of these assets more industrial unit rather than micro warehouse,” Mr Gwyn said.
“Post 2016 the more quality completions, together with the growth in demand for alternative investment options in the commercial asset class, saw values grow to the current average rate achieved in 2018 of $3,351psq m.“The average size of these assets in 2018 have been 98sq m, slightly down from 102sq m in 2017, and well down from the 2016 period where these properties were closer to 250sq m in size.”
*Ray White Between the Lines Commercial Research – TradeCoast Micro Warehouse Overview – November 2018