Interstate and international buyers are lining up for Perth industrial assets, with self-storage emerging as a sweet spot for investors seeking to cash in on Western Australia’s robust economy.

Analysis by leading independent agency Cygnet West shows industrial is currently Perth’s most active commercial property sector by transaction volumes, with the biggest challenge to meet buyer demand being the number of assets available on the market. 

Cygnet West Industrial Agency Executive Angette King and Cygnet West Partner Ian Mickle say demand is particularly strong for self-storage facilities, with increasing interest from interstate investment groups.

Ms King and Mr Mickle recently brokered the off-market sale of a three-property storage portfolio in Perth’s southern suburbs for $21.25 million to emerging Sydney-based fund manager KMD Partners.

The sales price achieved a net yield of 6.8 per cent, while KMD is targeting a leveraged return on equity of 12 per cent-plus per annum, paid in monthly distributions.

Ms King said the off-market campaign was hotly contested, with five offers presented from a range of local, east coast and international buyers.

“Demand for self-storage facilities is sky-high, and investors are eager to snap them up,” Ms King said. 

“Property groups are also finding the development of new storage or purchasing existing facilities to be difficult, with the sector now competing with owner-occupiers and industrial investors to acquire warehousing, vacant land or previously used large format retail.

“I wish I had more self-storage portfolios to take to market - they practically sell themselves!”

Ms King said she expected self-storage would continue to be highly sought after, with record low vacancy rates in the residential leasing market underpinning the need for more storage facilities.

“The rise of e-commerce and remote work has only increased the need for convenient, secure storage options,” she said.

“With high demand and limited supply, self-storage offers the potential for steady cash flow, low maintenance costs and strong long-term growth.

“It also offers investors multiple sticky tenants with a low-risk profile.”

Cygnet West Head of Research Quyen Quach said overall, buyer demand was buoyant in Perth’s industrial sector, even in an increasing interest rate environment.

“There is a lack of stock on the market, vacancy remains low at 2.15 per cent and rents continue to increase,” he said.

“Prime rents rose by 14 per cent in 2022, while secondary grade rents were 12.3 per cent higher.

“Resources sector exploration spending and infrastructure project investments are contributing to increased demand for industrial space, while there is also increasing demand from transport and logistics, manufacturing and fabrication.

“We expect transactional activity to continue to be strong in industrial throughout the remainder of 2023.”

For more details on Perth industrial investment opportunities, please contact Angette King of Cygnet West via the contact form below.