RENTAL GROWTH STRONGEST SINCE THE GFC2017 INDUSTRIAL PROPERTYINVESTOR BRIEF

WHY 2017 IS THE YEAR TO ACT ON PREDICTIONS OF GROWTH

INSIDE THIS ISSUE

Issue No 93 | March 2017

02 9630 8000

March 2017 Issue 93 | Page 2.

EDITORS LETTERWelcome to edition 93 of Industrial Property News. This month we continue to look at why industrial property as an Asset Class will likely to outperform other property classes in 2017. I believe 2017 will be one of the most important years in many for the sector and those that act this year on well-reasoned predictions will do well for many years to come. I do hope you learn from and enjoy this edition of Industrial Property News. - Barry Cawthorn

Our Client’s appoint us for our sales and leasing services because of our• Self-belief • Courage • LeadershipThey trust us and allow us to be who we are, the best industrial agents. So if you want the highest price or rental for your property - call us.

RENTAL GROWTH STRONGEST SINCE THE GFCLeading Industrial property agency company, Bawdens Industrial, has just released year on year research on the performance of net rentals.

The company is one of Sydney’s largest industrial property asset managers of Small Medium Enterprises (SME) property controlling in excess of 350,000m2 with a value exceeding 750 million dollars.

The study examined all lease transactions completed by the company with an area of less than 750m2, conducted in 2015 and then repeated the study in 2016.

The study revealed year on year growth of 6.3%. This result being the best performance since the third quarter of 2006 pre Global Financial Crisis.

The outlook for continuing growth in rentals in 2017 appeared healthy with the December 2016 quarter recording year on year growth increases of 10% despite flat jobs growth and falling output in the construction sector year on year.

Managing Director Barry Cawthorn observed the company had already experienced increased tenant demand this year, something we expect to develop further.

Demand will continue as aspirational SME businesses reject increased prices and/or cannot locate property or finance. These SME’s will then also become tenants, lifting demand for space and with no supply a period of above trend rental growth is likely to commence in the foreseeable future.

AUCTION SEFTON 693M2

• Freestanding building

• IN1 zoning

• Container hardstand

• Will be sold

Contact: Phil Higgins 0414 608 143

SALES AND LEASING SERVICES

March 2017 Issue 93 | Page 3.

EAST TRACK LOGISTICS TAKE FAST TRACK AT SMITHFIELDExpanding logistics group, Fast Track has just leased 63 Long Street, Leased for an initial term of 3 years, the property comprises a total area of 1,200 sq. inclusive of 228m2 of office space. The rental struck at $150,000 per annum plus outgoings reflected $125 per square metre. The deal was negotiated by Associate Director, Phil Higgins at Bawdens.

BAWDENS NEWS

WE ARE SYDNEY’S LARGEST MANAGERS OF INDUSTRIAL PROPERTY - WHY?

• We behave as if your property was our own• We earn trust from doing what we say we will. This delivers higher rentals from happy tenants.• Impeccable attention to detail increases your investment value• Unrelenting service to your tenant

We are the only agency that completes a transaction every working day of the year in the SME user space. We are Sydney’s largest specialist managers of Small Medium Enterprise industrial property.

SMALL MEDIUMENTERPRISES

% OF BUSINESSES IN ARREARS

RESEARCH

> 28 days > 14 days

2.75%3.2%

SILVERWATER - 533M2

• Quality showroom, warehouse and office.

• 6m clearance warehouse.

• 100 amps per phase.

Contact: Terry Saba 0416 175 009

FOR LEASE

NORTH ROCKS - 73M2•Centrally located complex. •Easy access and only minutes to M2 and Parramatta CBD. •Internal partitioning excellent value.

Contact: Robert Ally 0413 758 658

FOR LEASE

NORTH ROCKS - 150M2

FOR LEASE

•Office size area from 97m2 to 150m2. •Internal partitioning excellent value. •Street front. •Excellent value.

Contact: Robert Ally 0413 758 658

• Bawdens Agents lead from trust earned

• We produce market leading rentals and prices.

• Call us today

(Price or Rental obtained)Low High

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SALES AND LEASING

BAWDENS RYDALMERE “OFF MARKET” SALE NETS RECORD $8,750,000Bawdens Director Robert Ally has sold on behalf of a private client 24 South Street, Rydalmere.

In a deal negotiated with the purchaser’s agent Michael Wydeman of Property Fox the property has been acquired by a party who ultimately will use the premises for their business. Leased until 31 August 2018 with no options of renewal, the purchaser saw an opportunity to receive income whilst they prepare for relocation and expansion.

The current passing rental will return the purchaser 4.8% annually. Comprising a site area of 6,169m2, the land offers high functionality with access available from South Street and Pike Street. The building comprises a total area of 3,843m2.

Commenting on the sale, Robert observed that an increasing number of purchasers were not waiting for the property to be marketed but were actively identifying assets they desire and forwarding compelling offers to purchasers, as occurred in this instance. This enabled him to utilise skills to secure a price equal or better than an “on market” result might deliver.

BAWDENS NEWS

• Site 904m2, Will be sold

$300,000 EXTRA IN RETIREMENT$300,000 over reserve was the outcome at the recent Auction by Bawdens Industrial of 63 Carlingford Street, Sefton, in a deal completed by Senior Negotiator Phil Higgins. Thirteen contracts of sale were issued in respect of the freestanding building. Comprising 808m2 and situated on 1,104m2 of land, the building offered a rare exposure opportunity. Sold with vacant possession for $2,020,000 Investors and Owner Occupiers battled it out to yield the Vendors a windfall retirement top up. A terrific result for our vendor by David Scholes, Auctioneer and excellent negotiation skills employed by the Bawdens Sales and Leasing team.

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AGENT TO TEST SALE MARKET WITH SEFTON AUCTIONBawdens Industrial Associate Director Phil Higgins recently secured a record price for an 808m2 freestanding building in Carlingford Street, Sefton of $2500psm.

He will test this market again with the appointment by NSW Timber Products to sell their property at 8 Yamma Street on May 4 on site.

The freestanding building has a total area of 693m2.

Contact: Phil for Details on 0414 608 143.

BAWDENS NEWSDE

ALS D

ONE

LEASED

SOLD

LEASED

SOLD

LEASED

SOLD

LEASED

SOLD

LEASED

SOLD

Granville

Westmead

Smithfield

Mulgrave

Chipping Norton

Seven Hills

Smithfield

Seven Hills

Ingleburn

Auburn

March 2017 Issue 93 | Page 4.

AUCTION KINGS PARK 370M2

• Land 891m2 • Fully concreted yard • Ideal for motor trade/civil works • Rare small freestanding offering • Minutes to M7 motorway

Contact: Graeme Scott 0418 261 882

SEVEN HILLS - 343M2

•Located in low traffic area •Good container access •Additional mezzanine office over two levels •Available May 2017Contact: Terry Saba 0416 175 009

FOR LEASE

• Container access • High clearance warehouse • Bonus 40m2 mezzanine (not included in noted size) • Walking distance to Seven Hills train stationContact: Terry Saba 0416 175 009

FOR LEASE

SEVEN HILLS - 221M2

SPACE DEMAND

RESEARCH

5.7%

VACANCY RATE BY M2

RESEARCH

Vacant Space Managed Total Space Manage

BAWDENS NEWS

March 2017 Issue 93 | Page 5.

0-500m2 500-2000m2 < 2000m2

As Leading Industrial Property Asset Managers we were recently appointed to manage a 22 unit industrial estate.

The estate had the following problems which Bawdens Asset Management team have resolved.

• Common property and driveways were littered with tenant rubbish.

• Repairs to driveways and building were required.

• Tenants were all in arrears.

Today the owner is receiving more rent from happy tenants using repaired driveways and the owners have no arrears of rental.

We work with people who wish to appoint an agent who behaves as if they owned the real estate. We believe trust and loyalty to and from the client produces belief in purchasers that if they pay what is asked they are making the best possible investment in their own future. The best agents exercise integrity and are mindful about who they work with because they realise that every transaction they produce leads their market.

Bawdens is a supplier of premium agency services. The human ideals of a market focus, persistence, dedication, specialisation coupled with trust deliver the best outcomes.

OUR STORY

BAWDENS EFFECTIVE ASSET MANAGEMENT TO INCREASE OWNER CASH FLOW 15%

59%

16%

25%

ASSET MANAGEMENT - A CASE STUDY

ELITE PREMIUM & ENHANCED LISTING OPTIONS

MAXIMISE YOUR PRICE

Elite Premium and Enhanced listings ensure your property is found by prospective purchasers and tenants on the internet before any other property for sale or lease.

Elite Premium and Enhanced listings are submitted to prospective buyers and tenants before any other property for sale or lease.

*Discounted Price when advertised with Real Commercial, Commercial Real Estate and Commercial View Real Estate (3 month package) *Prices include GST

BLUE OCEAN WINDOWS EXPAND AT BLACKTOWNIn a deal negotiated by Bawdens General Manager Ben Lindsay, Blue Ocean Windows, a window frame supplier and distributor have leased 11 Chicago Avenue for a commencing term of three years. Commencing rental for the 1,233m2 building was $129,465 ($105psm plus outgoings per annum).

INDUSTRIAL PROPERTY – OUTLOOKFOR 2017

Leading Small Medium Enterprise Industrial Property Agents at Bawdens Industrial have released their client research values outlook

statement for 2017.

The results are summarised in the table below for Industrial Property News.

Research completed in 2016 and findings released revealed that rent free periods during 2016 had fallen.

In 2017 we expect these periods to continue to tighten but at a slower pace.

For the first time in three years we expect investment yields to stabilise with

no further significant falls expected.

Sale prices for the first half of 2017 will continue to rise.

As developer demand for site to build space for SME’s increased, we expect land prices will rise.

In the November 2016 edition of the Industrial Property News, we identified why lease terms are starting to increase. In 2017 we expect

this emerging trend to gather pace.

The year ahead is one of promise with no sector indicator showing an expectation of decline.

Length Of Lease Terms

Land Prices

Rentals

Sale Prices (Vacant Posessions)

Investment Yields

3

3

3

3

3

ITEM RISING/ GROWING DECLINING STABLE

BAWDENS NEWS

March 2017 Issue 93 | Page 6.

WEBSITE ENQUIRY

RESEARCH

28%43%

13%

25%

commercialview commercialrealestate

realcommercial google

• Door step of Parramatta CBD• 10 car spaces includes• Whole level suiteContact: Hayden Arapa 0435 221 335

• Bawdens agents believe best prices follow leadership

• Trust emerges from exceptional leadership and service.

• Call us for the highest price or rental on your property(Price or Rental obtained)Low High

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SALES AND LEASING

SEVEN HILLS - 258M2

•High clearance warehouse•Mezzanine air-conditioned office•Leased until April 2017Contact: Terry Saba 0416 175 009

FOR LEASE

2017 THE YEAR TO ACTBawdens Industrial General Manager Ben Lindsay notes that 2017 is already developing as the year to act, as the industrial market continues to mature and gain significant upward momentum. It’s a great time to take advantage of the inherent market demand, or conversely, to secure further opportunities whilst they still exist. The limited supply of land, the significant investment in infrastructure ahead of the WSA (Western Sydney Airport) and the firming and repositioning of rentals all reaffirm our advice… Act now to secure your position.

If you’re considering of purchasing, selling or leasing, contact Ben Lindsay on 0421 248 587.

ROSEHILL - 400M2

FOR LEASE

SMITHFIELD - 2,047M2

• Stated warehouse area includes 254m2 Flammable Goods Store• Awning area of 586m2 not included in stated area• Huge power supply• Excellent truck access• High clearance warehouse• 30 car spacesContact: Robert Ally 0413 758 658

FOR LEASE

We are the first agency to use e-cloud technology to complete behavioural marketing that identifies the buyers or tenants who will pay the highest price or rental.

We are Sydney’s only Industrial Agency focused on servicing small business industrial property users.

SMART INVESTOR CREATES THEIR OWN CASH FLOW A Bawdens private client has paid $4,100,000 for 23 Foundry Road, Seven Hills. In a deal negotiated by Bawdens Director Terry Saba and Associate Director Graeme Scott, the purchaser is now offering the property for lease via the selling agents.

A freestanding property, the property is modern offering clear span warehousing and office space totalling 2,189m2. Situated on land of 3,072m2, the property is situated in the heart of the Seven Hills precinct and 400 metres from the M2 Motorway. The selling agents comment that with opportunities to purchase quality real estate in very short supply, they expect many purchasers will look to the option of leasing in 2017.

• Bawdens appoint 3 specialists to every asset managed

• Call us today if you want more from your property investment

Low

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Rental High

ASSET MANAGEMENT

LEASING OR BUYING?

RESEARCH

Leasing Buying

32%

68%

Landlord rights to make good are equal to that of the tenant. An industrial lease with appropriate make good clauses is crucial to drawing a line in the sand with respect to each parties obligation. Equally as important is a proper entry condition report and photo log detailing the condition of the premises prior to the tenant taking occupation. This will set the standard and make the tenant aware of the condition they are expected to return the premises should they choose to vacate upon expiry of the lease. The diligent Asset Manager at Bawdens Industrial undertake detailed inspections and complete photo logs including preliminary make good schedules that ensure the landlords rights under the lease are protected.

To find out more information feel free to contact one of our experienced Asset Managers.

FREQUENTLY ASKED QUESTIONS What are my make good rights as a Landlord?

NORTH ROCKS - 102M2

RIVERSTONE- 643M2

• Clean and tidy office over two levels • Ground floor can also be used as showroom • Cheap rentalContact: Robert Ally 0413 758 658

• 3 Tonne overhead crane • 300 amps power • Included in above stated area is 250sqm covered areaContact: James Zerefos 0400 326 828

FOR LEASE

FOR LEASE

NORTH ROCKS - 410M2

• Three roller doors • Stated area includes awning of 173.1m2 • Yard of 336.8m2 available

Contact: Robert Ally 0413 758 658

FOR LEASE

March 2017 Issue 93 | Page 7.

WHAT ARE MY OBLIGATIONS IN RELATION TO FIRE SAFETY?As an owner of a building it is a lessors responsibility to ensure that there are essential safety measures are in place with respect to fire. The building must be compliant in accordance with its base condition i.e. no fitout. When tenant takes occupation it becomes the tenant’s responsibility to ensure that the building remains compliant and this may include installing additional safety measures in accordance with their use of the property or fitout. Bawdens Industrial utilises best practice methods to ensure that all properties are fire compliant by making both landlords and tenants aware of their obligations and engaging reliable trusted contractors to undertake the works.

• View our monthly Industrial Property News• Find out what transactions we have just completed• Be up to date with the current market www.linkedin.com company /bawdens-industrial

FOLLOW US ON LINKED IN

Disclaimer Notice: Neither Bawdens Industrial, nor the publishers and editors of articles in this issue accept any form of liability, be it contractual, tortious or otherwise, for the contents of this newsletter or for any consequences arising from its use or any reliance placed upon it. All the information contained in this publication has been provided to us by various parties. We do not accept any responsibility to any person for its accuracy and do no more than pass it on. All interested parties should make and rely upon their own enquiries in order to determine whether or not this information is in fact accurate.

WE ARE THE ONLY AGENCY WITH REAL TIME DATABASE MANAGEMENT.

WHERE IT ALL CAME FROM

RESEARCH

Signs Other

internet Bawdens IPN

25% 17%

17%

41%

2017 INDUSTRIAL PROPERTY INVESTOR BRIEF

In 2016 the rapid growth in rates paid per square metre for industrial property in the SME sector took informed players by surprise. Un-informed parties are realising now what happened. Resale transactions completed and analysed by leading industrial property company Bawdens often revealed price growth in excess of 15-20% annually. Completing a transaction every day the company is well placed to comment on the year ahead.In the January edition of the Industrial Property News, the company provided a sector outlook statement which revealed that investment yields are expected to stabilise and not increase. No increase in yields is expected despite a bias to rising borrowing rates, this is because informed

investors realise that the market in 2018 and beyond will present significant rental growth opportunities from existing secondary assets leased 2 to 5 years ago. In 2017, as purchasers cannot locate existing assets to buy or reject increased prices, tenant demand is expected to drive up market rentals at rates of escalation greater than existing rental review patterns provide for. This creates today an opportunity for investors to capture that future growth (rental reversion) and an increased return on capital in the near future. For this reason, we anticipate continuing strong demand from investors will not alter yields from present levels in any significant way in 2017.

BAWDENS NEWS

THORNLEIGH - 288M2BANKSTOWN - 426M2

•50/50 split between storage/warehouse and office•Good access, flexible space•Ideal for all clean tradesContact: James Zerefos 0400 326 828

• Freestanding building • Great truck access • Off Canterbury Road and the M5 MotorwayContact: Robert Ally 0413 758 658

FOR LEASE

FOR LEASE

SILVERWATER - 636M2

•Excellent container access •Modern quality office •Available 26th May 2017 Contact: Terry Saba 0416 175 009

FOR LEASE