PRICES STARTING TO RISE AS PURCHASE DEMAND OUTSTRIPS SUPPLY

Prices starting to rise as purchase demand outstrips supply.

A growing disconnect between occupiers wanting to purchase their premises and owners wanting to only lease is putting upward pressure on sale values.

Owner occupiers of industrial property in the market for new premises are in many cases finding the purchase process difficult and at times frustrating. There are a number of reasons why this is the case but the two most significant are:

• A lack of available existing buildings for sale.

• The cost of finance is making property owners reluctant to sell (let alone negotiate) even when the property is actively on the market. With very few alternatives that offer similar yields and capital gains tax implications owners are commonly refusing to negotiate or taking the property off the market.

This situation is starting to have an upward pressure on values with Rutherfords achieving $7.35 mill ($1392m²) for an existing 5280m² building and $186m² + gst for a 1ha allotment both in the Northern suburbs in November. Both occupiers set new records for the Northern region and were driven by owner occupiers with very few options available.

This looks set to continue with a high number of owner occupier enquiries to purchase and little stock to provide to supply. 

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