Stand aside school catchments and easy water access.
According to the experts, the newest driver of demand for residential markets is… industrial!
Traditionally a no-go zone for homeowners and investors alike, ‘industrial lifestyle precincts’ have driven a new wave of residential property demand, according to Chris McKillop, a commercial director at Herron Todd White
The emergence of ‘Lifestyle Industrial’ is changing the face of sought-after residential markets across the country, and it’s created a prime opportunity for homeowners and investors to profit according to McKillop.
Lifestyle industrial describes old industrial sheds and new industrial developments being utilised by lifestyle businesses rather than heavier industrial uses, and they’re attracting residents and visitors alike.
“Lifestyle industrial sees sheds moving away from their traditional use for businesses like smash repair shops, spray painters, and steel fabricators, and toward more resident-friendly operations such as microbreweries, high-quality restaurants, cafes, hairdressers and florists.
Some have even become live music venues fronting retail clothing outlets, gyms, and sporting venues.”
Mr. McKillop said lifestyle industrial has flipped the property game on its head for both homeowners and investors.
“Historically, being near the industrial property was an absolute no-go for residents with claims of noise, smell, and heavy-use activity being a turn-off.
But these new precincts are now being embraced by residents, with flow-on benefits for their property values – some are even choosing to live within the industrial hubs themselves.”
Why they work Mr. McKillop said there are some essential components helping differentiate lifestyle precincts from traditional industrial spaces.
“Normally, these sorts of projects evolve from established, older industrial precincts close to appealing population centres.
Areas where there’s already good quality housing nearby, or in close proximity to CBDs, do well as industrial lifestyle hubs.
But we’ve also seen the concept being embraced by developers building new industrial projects.
They’re choosing to adopt higher-end architectural designs and finishes to attract lifestyle tenants to their industrial areas, leading to sale price premiums for their sheds.”
Homeowner and investor benefits
Mr. McKillop said the phenomenon had even enticed some buyers to live within lifestyle industrial estates.
“Depending on local government guidelines, industrial sheds can include caretaker units.
In some cases, these are being bought by homeowners – particularly those who need additional space for parking, general storage or to operate their own business.
We’re seeing homeowners buy these sheds so they can own a decent sized living area and huge additional space for, say, $800,000 in a location where houses cost around $1 million.
The popularity of lifestyle industrial is seeing an uptick in investor interest too.
They can buy these investments for sub-$500,000 and they’ll get a five per cent net rental return because the tenant typically pays all the outgoings.
There’s definitely more investors starting to creep into the space now.”
Top tips Mr. McKillop said there are some key due-diligence steps anyone buying lifestyle industrial should consider.
“For those contemplating a home unit in a lifestyle industrial precinct, make sure you check the area’s zoning so you’re not near heavy industry users.
Also, make sure your caretaker’s unit is approved for habitation and not simply an office space.
New lifestyle industrial is being developed by niche developers.
Following these organisations can help you unearth properties with great potential ahead of other buyers.
For investors, seek lifestyle industrial property with a good tenant already in place whenever possible.
If you are speculating by buying a vacant lifestyle industrial property, get advice on tenant demand in your area. Having an untenanted commercial property of any sort is risky at the best of times.”
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