BING NEWS

Investors Making Rents Compelling

There is a key message I’d like to reinforce to occupiers in the market at present.

Despite general business confidence being subdued, the buoyant property investment market is delivering the opportunity to secure significant rental discounts, particularly via a design & construct procurement process.

The reasoning is simple.

Demand for prime investment grade industrial assets has driven down cap rates, now widely acknowledged at being in the range of 6.75% – 7.25%, if not sharper for larger scale developments in excess of 20,000m2. This is a dramatic change from the accepted range over the past few years which has generally been stable at 8% – 9%.

This yield compression has allowed developers to be more aggressive when offering leasing proposals to occupiers. In one recent example completed by Bing Property Group, a rental deal was procured at a discount of 20% below the level that would have been accepted as a “market rate” in the post-GFC economy.

So what does this mean?

It means that smart businesses should be looking to capitalise on these unique property conditions to not only lower their rental obligations, but to improve their operations so they can drive greater efficiencies from their supply-chain & warehousing networks.

If you are curious to know what the property market can do for you, feel free to touch base with me for a confidential discussion.