4 min read
QUICK SUMMARY
- THE MARKET: Perth industrial vacancy is sitting UNDER 2 PER CENT, making it one of Australia’s tightest markets.
- THE DEMAND: Logistics, resources, defence and local business growth are competing for limited space.
- THE DEALS: Major transactions in Bullsbrook, Welshpool, Forrestfield and Hazelmere show strong institutional and private investor confidence.
- THE TIMING: Buyers still have opportunities, but finance needs to be arranged before making an offer.
- THE FIX: Understand your serviceability, precinct, valuation risk and lender appetite before you negotiate.
WHY PERTH INDUSTRIAL IS SO TIGHT
Perth’s industrial market is running hot while much of Australia’s residential and office property market is cooling. Vacancy is sitting UNDER 2 PER CENT across the city, with some northern precincts reported closer to 1 per cent.
That is a powerful statistic, but it is not the whole story. Perth has limited developable industrial land, construction costs remain challenging, and new supply takes time to reach the market.
At the same time, demand is coming from several directions. Logistics operators need distribution space, resource-sector businesses require workshops and yards, and defence-related projects are supporting demand for specialist industrial facilities.
This imbalance is pushing rents higher and keeping well-located buildings tightly held. Transaction volumes declined over the past financial year, partly because there were fewer suitable assets available and construction was difficult, but investor appetite remains strong.
The contrast with softer national residential and office markets is important. Perth industrial is not immune to interest rates or economic cycles, but its supply constraints and diverse tenant base are providing meaningful support.
WHAT THE BIG DEALS TELL US
The recent deal flow suggests sophisticated buyers are treating Perth industrial as a long-term play, not a short-term punt.
Troon Group entered the Perth market by purchasing a 180-hectare Bullsbrook site for ABOUT $80 MILLION. The group plans to create roughly 130 industrial lots for sale and lease, helping unlock future supply in one of Perth’s most land-constrained corridors. Read more about the Troon Group Bullsbrook acquisition.
In the east, Cosgrove Group acquired industrial assets in Forrestfield and Welshpool for $58.2 MILLION. The wider Lester Group portfolio generated almost $80 million in transactions, attracting domestic and offshore institutions, local investment managers, syndicators and private buyers. Read more about the Welshpool and Forrestfield transactions.
There is also new development activity. Hesperia has added a $13 MILLION warehouse to the Hazelmere industrial precinct, while the Neerabup Industrial Area expansion is set to begin next month. The project will create 41 new lots, ranging from 1,500 square metres to 4,600 square metres, with further stages expected over time. Read the Neerabup expansion update.
The ASX-listed IMDEX global headquarters in Balcatta is also on the market, with expressions of interest closing on SEPTEMBER 17. Together, these developments show that capital is following strategic locations, secure income and future land value.
WHAT THIS MEANS FOR BUSINESS OWNERS AND INVESTORS
For an owner-occupier, rising rents can change the leasing versus buying calculation. Buying may provide greater control over the premises, reduce exposure to future rent increases and create a long-term property asset.
However, ownership is not automatically the better answer. You need to separate the location decision from the ownership decision. First decide where your business genuinely needs to operate. Then compare leasing and buying based on cash flow, flexibility, deposit requirements and your personal risk appetite.
For investors, prime industrial yields have stabilised around 6.0 to 6.5 per cent. Rental growth remains positive, but the headline yield is only one part of the equation. Tenant quality, lease length, building condition, outgoings, vacancy risk and future capital expenditure all matter.
Competition also means finance should be ready before you find the property. A conditional approval or well-prepared application can give you confidence to move quickly without confusing speed with recklessness.
FIVE THINGS TO DO BEFORE YOU BUY
STEP 1: CHECK YOUR SERVICEABILITY
Test repayments against a possible rate rise, including the live risk around the RBA’s SEPTEMBER 29 meeting. Make sure the business can handle higher interest costs without relying on perfect trading conditions.
If the property will be owner-occupied, include realistic assumptions for fit-out, relocation, equipment and working capital. Our Working Capital finance solutions may help manage cash flow during the transition.
STEP 2: GET A REALISTIC VALUATION SENSE
A tight market does not mean every building is worth its asking price. Compare recent transactions, rental evidence, building quality, access, zoning and land value before deciding what you are prepared to pay.
Valuations are still being tested, particularly where a property has unusual improvements, a short lease or limited comparable sales.
STEP 3: FRONT-LOAD YOUR FINANCE FILE
Prepare current financials, recent entity statements, tax information, asset and liability details and a clear explanation of the transaction. If there is a leaseback, provide signed lease schedules.
Be ready to provide valuer access when requested by the lender. In a competitive market, missing documents can cost more than time. They can cost you the deal.
STEP 4: KNOW YOUR PRECINCT
Welshpool and Kewdale offer established eastern-corridor access and strong occupier demand. Bullsbrook and Neerabup provide future growth and larger land opportunities, but infrastructure, timing and access need careful review.
Hazelmere and Forrestfield have their own mix of logistics, industrial and land-rich assets. Balcatta offers established infill positioning, but availability can be tightly held. The right precinct depends on your operations, staff, customers and supply chain.
STEP 5: TALK TO A BROKER BEFORE YOU NEGOTIATE
A commercial property broker can help identify lender appetite, structure the application and explain the trade-offs between major banks, specialist lenders and other funding options.
You can explore Commercial Property Loans before signing a contract, rather than discovering your finance options after the negotiation has started.
RISKS AND WHAT TO WATCH
Perth industrial may continue to perform, but momentum is not a substitute for due diligence.
Prime yields could compress further, but interest rates could also rise. Paying too much because other buyers are enthusiastic can reduce your future return. For an investment property, a tenant leaving may create a long vacancy, leasing costs and refurbishment expenses.
There is also a practical risk in buying the wrong precinct. A cheaper warehouse is not a bargain if it adds hours to deliveries, makes staff access difficult or prevents the business from growing.
TERMS TO KNOW
- Industrial vacancy rate: The proportion of industrial space that is available to lease. UNDER 2 PER CENT indicates a very tight market.
- Prime yield: The annual net property income expressed as a percentage of the property’s value.
- Owner-occupier loan: Finance used by a business to buy premises it will occupy and operate from.
- Land bank: Land acquired and held for future development or use as supply and market conditions evolve.
THE BASELINE DIFFERENCE
Perth industrial property can reward buyers who plan carefully, move decisively and understand the risks. At Baseline Finance, we provide jargon-free, transparent advice and act as your single point of contact through the lender process.
Our Strategic Funding Plan creates a comprehensive, benchmarked roadmap within 7 days, helping you understand your borrowing position before you make an offer. We handle the paperwork, lender negotiations and moving parts so you can focus on whether the property is genuinely right for your business or investment strategy.
CONTACT BASELINE FINANCE
Phone: 08 6108 3925
