Is There an Industrial Property Revolution?

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IF YOU HAVE ever bought something online, you probably haven’t put much thought into the detailed process from purchase to delivery.

With the rise of online retailers such as Amazon, this process has become very systematic and sophisticated using a mix of advanced technology and human labour to pick, pack and send orders.

This process usually takes place within an industrial warehouse.

In 2016, there were just over $4.5 billion in industrial sales nationally, slightly above the five year average of $4.3 billion. According to research from Colliers International, this upward trend is set to continue with strong demand from offshore Asian-based investors and Australian-based local funds.

So why is demand rising for this type of property?

Demand for inventory storage, distribution centres and retail warehousing is in line with the general rise in online shopping in Australia.

Food processing and storage facilities are also highly sought after while there is opportunity locally for businesses to take advantage of rising export demand from countries such as China.

Furthermore, a low interest rate environment, strong GDP growth and a weaker local dollar (which can encourage an increase in net exports) have all contributed to this demand.

Some interesting market trends.

More jobs and economic hubs are being created outside of metro areas including south east Queensland, the north and south coast of New South Wales, on the outskirts of Melbourne in Victoria and in the Pilbara region of Western Australia.

Research from Colliers International and Jones Lang LaSalle (JLL) points to an increase in sale and leaseback programs for industrial properties. This is likely due to corporations looking to capitalise on price increases; while fund managers continue to pay premiums for stabilised income profiles.

Changing technology and consumer behaviour is creating demand in this market. Evolving shopping behaviours and the growth of online retail is affecting the type of commercial space required to make mass distribution effective.

As the demand for industrial property grows across the nation, it is important for building owners to be aware of the depreciation benefits for these properties. An investor’s depreciation benefits vary depending on the type of building, its age, use and fit out.

The table below highlights the substantial depreciation returns that industrial properties can provide you as an owner.

Some typical assets you will find in an industrial warehouse include: lighting, mechanical ventilation, cranes and weighing systems.

Bottom Line: It’s important to note that both commercial business owners and their tenants can claim depreciation and capital works deductions on industrial buildings. Owners can claim for the existing building structure, any fixed assets and plant and equipment assets they own while tenants can claim any fit out they install after their lease commences.


The Future for Retail Investment Property

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OVER THE PAST few years, you will have observed my caution towards purchasing retail property as a worthwhile investment. This is basically been the case since the global financial crisis – when consumers began tightening their belts. [Read more…]

Income Tax Deductions for Commercial Properties

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ARE YOU LOOKING to buy a commercial property? If so, remember that you may be entitled to significant income tax deductions.

You can (and should) claim deductions for the various outlays you incur. Therefore, when you purchase a commercial property such as an office, factory or shop … don’t forget to maintained records right from the very start. [Read more…]

The Office Market Crown is Set to Move to Melbourne

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SYDNEY HAS traditionally claimed to be the largest office market, with the greatest office space take-up each year.

However, more corporate tenants leased space in Melbourne during the second half of last year, then any other capital city. In fact … 110,000 sqm more space than they actually vacated. [Read more…]

Are Childcare Centres the Next Big Thing for Investors?

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THE GROWING DEMAND for childcare centres is no longer just from parents jostling to get their kids on waiting lists.

It’s increasingly also coming from investors looking to get a slice of this burgeoning real estate market and to take advantage of the significant tax deductions available for this type of property. [Read more…]

More Vital Accounting Tips For Commercial Property

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AS COMMERCIAL PROPRTY investors, managing finances can be one of the most important aspects of ownership. No matter how many buildings you own, you still have to run your business and finances accordingly. [Read more…]

You Need to Look Behind The Economic Data

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A NUMBER of journalists and economic pundits seem to have been focussing solely upon the latest GDP figures.

However, the recent NAB monthly business survey appears to contradict concerns about the shaky household consumption sector – where the main concerns seem to relate to past issues.

Mainly things like … the end of the mining boom, resulting in a collapse of wage growth. [Read more…]

Commercial Loans With No Financials – Is It Possible?

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TRADITIONALLY, for any business or commercial loan, most lenders will require at least two year’s past tax returns and financials to establish servicing capacity.

For some borrowers, this is either not desirable or not possible. And so, here is a summary of several loans that could be available for such a borrower; plus how those loans may also apply to you, as a commercial investor. [Read more…]

4 Tax Tips for Commercial Property Investors

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AS THE END of the financial year approaches, commercial property players should know their tax implications – especially first-time commercial property investors, who need to be aware of the key differences for owners and tenants. [Read more…]

Removing Budget Confusion Over Claiming Depreciation

THE 2017 FEDERAL BUDGET (handed down by Treasurer Scott Morrison on Tuesday 9 May) includes proposed changes, which will affect residential property investors Australia-wide.

At this stage, our understanding is that depreciation claims relating to commercial properties won’t be affected. This is good news for anyone who owns a commercial property. [Read more…]

Underquoting Laws Change

UNDERQUOTING can take place whenever a real estate agent misleads a potential buyer about the likely selling price of a property – be it for commercial or residential real estate.

For example: When a property is promoted at a price that is lower than its estimated selling price, the seller’s asking price or at a price that the seller has already rejected. [Read more…]