Knight Frank has created a dedicated national Industrial Investments team to strengthen its presence in the industrial sector and better service its valued clients.

The team will be led by Knight Frank Partner, Head of industrial Investments and Head of North Sydney Angus Klem, who will connect all of the firm’s industrial investments experts together to achieve greater collaboration.

To extend its reach and enhance its offering to clients nationally, Knight Frank has appointed Tom Iredell and Scott Braithwaite as Director, Head of Industrial Investments for Western Australia and Victoria respectively alongside Elliot Ryan, Associate Director, Industrial Investments in Queensland.

All four will continue to work alongside Knight Frank’s broader industrial logistics business, while driving activity in industrial investments.

Knight Frank National Head of Industrial Logistics James Templeton said the team changes tied into Knight Frank’s broader industrial logistics strategy.

“As industrial property continues to generate solid investor interest we believe now is the opportune time for Knight Frank to offer a genuine team approach with a specialist in each state,” he said.

“Bringing all our knowledge, experience and networks together will provide our clients will the best service as the sector continues to grow and evolve.

“This year is expected to be another solid one for the industrial market following on from several years of growth.

“We are seeing values hold up due to rental growth and we expect this trend to continue over 2023, albeit with more moderate rental growth than what we have seen last year.”

Mr Klem said Knight Frank achieved more than $700 million in sales across more than 25 deals in 2022 ranging from $15 million to $80 million, with an average sale price of $35 million.

He said the mid-market was where the majority of transactions were occurring, and would likely continue to make up the bulk of sales for 2023.

“In the current market we are seeing fewer big portfolio sales, with more activity in the mid-range of the market.

“Brownfield sites are some of the most sought after at the moment because they offer development potential but they are often sold with a short-term leaseback, providing the buyer with the security of income while they seek development approvals, which can take 12 to 18 months.

“Even if there isn’t a leaseback, there is no shortage of tenants to provide that income with Australia’s leasing market experiencing extremely low vacancy.

“These brownfield sites are usually priced under $100 million, and this price range, along with the income security, is more palatable for financiers in this higher interest rate environment, so it’s easier to secure funding.”

Mr Klem said institutions were largely the owners holding the bigger industrial holdings and very few were being put up for sale given the strength of the industrial market, with record low vacancy and strong rental returns, with rents continuing to rise.

“In many cases institutions are selling some of their mid-range industrial assets in their portfolios now to fund developments and holding their bigger sites,” he said.

“In this market it is more prudent to sell some assets to help fund development as opposed to seeking funding from the banks or other capital sources.

“We are, however, also seeing mid-tier corporates selling assets with almost-obsolete improvements that they own and occupy on a short-term leaseback to facilitate a move to a better facility that better suits their needs, with greater efficiencies.

“They then often choose to rent another facility and use the cash to inject into their business.”

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