Commercial real estate expert Lillie Cawthorn shares top tips for investment

Some of the best property yields – 7 to 10 per cent – are now in the industrial sector, so is it time to invest in a factory or warehouse rather than bricks and mortar?

We asked Lillie Cawthorn, who has a multi-million dollar property portfolio and is a director of Bawdens Industrial (Parramatta), which manages more than $550 million worth of industrial assets.

Cawthorn bought her first property at 20 and has industrial and residential investments in Australia, the United States and France.

“The advisors I speak with are all saying now is the right time to buy industrial real estate in Australia and you can see the prices already starting to rise on factories and warehouses in Sydney and other capital cities,” she says.

Cawthorn says low vacancy rates, higher rents and the fact that business is on a general upswing nationally is promising for the industrial market.

“Since the GFC, building activity has slowed so there is a limited supply of factories and warehouses coupled with increased lease transaction levels,” Cawthorn says.

Cawthorn has written a how-to book on investing in industrial property called The Money Factory. It is aimed at women but Cawthorn say it is equally useful for men interested in the the industry.

The book covers every thing from budgeting for a deposit to joining a real estate investment fund.

“Potential investors can be put off by the term industrial property but you don’t need to start with a big budget or be an industry expert,” Cawthorn says.

“If you seek out the right real estate agent and asset manager, a factory or warehouse can be a very easy assess-and-forget income stream.”

Entry-level finance for an industrial property in Sydney is about $450,000, less in regional areas, with lenders generally requiring a 35 per cent deposit.

“Industrial is generally a higher yield than residential, it’s easier to manage and a more stable investment,” Cawthorn says.

“The leases are typically longer for industrial tenants, three years being the current average and the tenant tends to roll into a repeat lease.”

Cawthorn said annual rent can vary from $30,000 to $100,000 for small to large industrial properties.

Risks include not having a financial buffer to cover non-tenanted periods, buying in regional areas where there may not be as much demand and buildings with difficult access.

“For me investing in industrial property is all about purchasing a simple square or rectangular shaped building, which allows the tenant to move goods in and out easily,” she says.

“It’s also essential to have an experienced team of people to call on for advice rather than trying to be the expert yourself.”