Market Advice for Industrial and Commercial Property Investors
Are yields increasing?
Phil Levesque, FAL Property Group, QLD:
“In terms of yields we are seeing in the Brisbane industrial market is that most of the A Grade properties are still getting sub 6% for the yields B grade are transacting somewhere between 6% and 7%. That’s if there’s actual stock to be found, but there has been a slight increase in the yields in the last few months. However, with the interest rates tip to drop next year and with the demand remaining high, we expect that yield to compress slightly in 2025.”
Chris Chesky, MLV Real Estate WA:
“Yields have softened in the order of 50 to 75 basis points across the last 12 months. That said, it is important to remember they’ve come off an extremely low base from pre covid levels.”
Artie Kalpidis, Link Property Services NSW:
“Prime yields sit around the five to five and a quarter percent at a largely remain around this level. So long as the interest rate cycle is where it is. Sydney’s industrial property market has seen yields remain relatively compressed in prime areas, but yield compression could creep into the market late next year if the inflationary environment improves. But the pace of yield compression has slowed due to the rise of interest rates and the increased cost of capital. While high quality assets will likely continue to see low yields around that 4% to 5% mark secondary or less sought after, so industrial properties may experience a moderate increase in yields as investors demand higher returns in response to higher financing costs and perceived risk.”
Matt O’Dea, Facey VIC:
“There is pressure on yields to increase and most of the investors in our market are seeking returns of 5.5 to 6%, which does make sense given the lending environment. There are exceptions to the rule. We did divest of a major asset in Dandenong South in the month of October, which actually was a net effective yield of 4.6%. So there are circumstances where we can achieve things outside the norm. However, that’s the general status quo for now.”
