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The apartment boom in inner-city Sydney that gobbled up a lot of old industrial land has pushed businesses further out to the western and south-western suburbs where demand for warehouses is running hot, according to one prominent Sydney auctioneer.
Damien Cooley, whose Cooley Auctions compiles a monthly index of property values based on his auction results, said that Sydney’s apartment boom was changing the face of the city’s commercial property market.
“The residential boom is forcing businesses away from south Sydney and other areas and they’re being pushed west. So many industrial areas have been rezoned to residential,” Mr Cooley said.
His figures showed more commercial properties in western Sydney had been auctioned so far this year compared with last year, and that the value of these sales had jumped.
For the three months to the end of June, 92 commercial properties went under the hammer through Cooley Auctions for a total value of $155 million, compared with the 60 properties that were auctioned in the second quarter of 2016 at $85 million.
“Commercial property auctions have been very successful this last quarter. Clearance rates are good, results are strong and buyers are confident. Industrial auctions are flying,” Mr Cooley said.
BIS Oxford Economic’s chief economist Frank Gelber said the increasing demand for warehouses in these industrial areas in western Sydney was likely due to companies looking to escape restrictive inner-city areas for land with better transport links.
“Even in the middle-ring areas where we had a lot of the older obsolete industrial space, and I say obsolete meaning surrounded by residential developments, that makes sense for someone to move,” Mr Gelber said.
“Industrial space, particularly warehousing space goes further out near new arterial roads and transport connections and they [businesses] can be much more efficient.”
The figures from Cooley Auctions also showed that in the three months to the end of June 73 per cent of commercial properties sold at their auctions fetched on average $175,000 more than the reserve price.
Mr Cooley cited the recent sale of an industrial site at Wetherill Park as a case in point.
The property at 4 Allen Place sold for $2.18 million, with 10 bidders pushing the final price $230,000 more than the reserve.
“The demand came from all purchasers – including owner occupiers and investors – as the site was within a highly sought after high-turnover size category,” said Marcel Elias, of LJ Hooker Commercial, the agent to who sold the property.
“This was one of the first properties of this scale to be offered within circa 12 months. Accordingly, demand was strong.”
Mr Elias said the result was a sign of things to come for the western Sydney industrial market.
“As this was the first result as such to occur for some time it has set a new precedent with respects to pricing expectations for freestanding buildings within western Sydney,” he said.
Another example of the trend, according to Mr Cooley, was the sale of an industrial property at 59 Vore Street, Silverwater, which fetched $1.31 million more than the reserve price.
Listed through JLL Parramatta, the 2380-square-metre property fetched $5.01 million after eight bidders battled it out.