In response to the excellent article in “How to invest in Industrial Property” dated June 30, 2016. I would like to clarify the following 4 points for my property apprentices:

  1. It is a little “understood fact that Industrial Real Estate investments return 3 to 4 times more than residential real estate investment; currently  6- 9 % NET for Industrial real estate i.e after costs, compared to 3- 3.5 % GROSS for residential real estate returns i.e  before costs. Most people do not understand how significant that is.
  2. Typically long vacancy periods are not the norm and are usually associated with difficult to rent buildings – very large or purpose built buildings, or the owner is asking too much rent for the current market.  For the vast majority, vacancy is minimised and managed by a competent asset manager who will secure the intentions of the tenant at least 3 months ( and usually 6 months) before the end of a lease thus giving an agent who  specialises in industrial leasing, ample time to find another tenant before the old tenant leaves.
  3. The rule of thumb with any real estate tenancy should be to keep 3 to 6 months rent ( as a safety net amount ) aside just in case, (which is good business practice anyway)
  4. Parking is a requirement determined by local council when developers obtain development consent. Developers will not receive council approval unless the builder supplies the minimum amount of parking required under that council’s car parking registration code for industrial developments.

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