The LJ Hooker Commercial network has posted its largest month for settlements in two years as owner-occupants capitalise on record low interest rates and Australia’s exit from COVID-19.Across Australia, $113 million worth of commercial assets changed hands within the LJ Hooker Commercial network over the last month, led by a series of large acquisitions in city industrial corridors and regional markets.

Amongst the major settlements were:

• the $23m purchase of a Toowoomba warehouse and office facility across a 4ha site

• the $18.15m sale of a Campbelltown warehouse on the doorstep of the M5 to a local importer

• the $14m off-market sale of a warehouse and office at Huntingwood across more than 14,000sqm.

Managing Director of LJ Hooker Commercial Mathew Tiller said tenants were increasingly weighing up the benefits of making the shift to owner-occupancy in the current financial environment.

“The cash rate is anticipated to stay at record-low levels for the foreseeable future,” he said.

“That’s driven owner-occupants to secure their futures and position themselves for long-term capital growth and finance repayments that, in some instances, are below asking rents.

“Operators in transport and logistics – or servicing specialists in that sector – have generally survived COVID. The industrial sector proved its worth in the marketplace over the pandemic as operators in essential supply chains and e-commerce continued to service markets across Australia.”

Mr Tiller said the uptick in sales represented a definitive step in Australia’s exit from COVID-19. The likely availability of a vaccine in 2021 was also driving market confidence, he said.

But owner-occupant confidence was not restricted to large-scale distribution centres, he said.

“There’s been a lot of activity in the sub-$5m market,” he said.

“Industrial rents across Sydney, for instance, have held stable in the last year despite the pressure of COVID-19. In many instances, owner-occupants are making the move to becoming owner occupants in strata light industrial units and sub 1,000sqm freestanding facilities because their loan repayments are on par – if not less – than market rents.

“Compared to the same time last year, sub $5m settlements were 19% higher last month.

“In many of the metropolitan markets, supply of industrial land is constrained, so there’s scope for owners to enjoy long-term growth.”  

Investors have also sought sanctuary in industrial during COVID-19 as other asset classes and cash returns have remained subdued. Prime industrial yields range from 4.7-5.3% in Sydney, 5.4-5.7% in Melbourne and 5.9-6.3% in Brisbane. Outer South Adelaide offers the best returns for industrial investors in Australia (8.4%).

“The weight of money heading into industrial precincts in Australia’s major distribution corridors has caused yields to tighten. However, the returns on industrial are still comparatively stronger than other asset classes and relatively secure.”