The latest $6.45m sale on the Gold Coast shows investors take on risks on older vacant properties due to shortage of quality leased investments
Vacant industrial facility, 26 Production Avenue in Molendinar on the Gold Coast, sold for $6.45 million to a local family-owned investment entity who plan to do minor works to the property before seeking a high quality tenant.
The 1.5ha property comprises three metal clad buildings, including a two level office block with a total net lettable area of 6,696sqm and 26 car parks on-site. The property is usually listed for lease at around $100 per sqm net and can be split into multiple smaller areas as required.
Pat Cavanagh of Colliers International who marketed the property fielded multiple offers from a wide spectrum of buyers including owner occupiers and investors.
“With quality leased investments hard to find, more investors are taking a risk on older vacant properties with a view to value add in the medium term and yield a high return once fully leased.
“The buyer is aiming to yield about 8 to 9 per cent return on the property once fully leased, and it is likely it could take 6 to 12 months to fully realise the asset’s potential.
“The leasing market is a little subdued currently with lower interest rates enabling tenants to obtain funding relatively easy and cheaply, so they end up purchasing.
“Demand to purchase industrial facilities has continued to soar in recent months from investors, developers and owner occupiers. Property is in short supply, which is driving the prices up.
“We’ve seen some strong gains in the industrial market in the last two years, with land in particular. Recent land sales of smaller vacant industrial blocks have exceeded $400 per sqm in some cases.
“Whilst the general outlook for the balance of the year remains positive, some groups are putting the brakes on temporarily whilst they await the outcome of the federal election. Others are hedging their bets in anticipation of a result that will likely encourage further growth,” said Mr Cavanagh.