Savvy Sellers Bring Down the Gavel

A lack of stock and buyer demand have combined to make auctions the perfect tactic for commercial vendors.

Over the last year, there’s been plenty of headlines showcasing the premium results auctions have delivered to home sellers around Australia.

But the auction process isn't just exceeding the expectations of residential sellers: commercial sector vendors are likewise reaping the benefits of the selling process.

And that’s been most evident in Western Sydney’s industrial market over 2021, as the recovering economy and record low interest rates have seen reserves smashed for warehouse and distribution facilities by both owner-occupiers and landlords. In one month alone, LJ Hooker Commercial Silverwater held three auctions which collectively smashed reserves by almost $6 million.

Results for the office included:

• $10.4m for a 2,290sqm warehouse on a 7334sqm site at Smithfield ($8.5m reserve);
• $7.87m for a 2,150sqm facility on a 3,776sqm Girraween site ($5.1m reserve);
• $5.1m for a 100sqm Wetherill Park warehouse on almost 3000sqm of land ($3.6m reserve).

“There is simply not enough stock to sustain the demand for good quality industrial within the western Sydney infrastructure corrdiors” said Marcel Elias, co-Director of LJ Hooker Commercial Silverwater.

“Auctions are the perfect strategy for owners who are looking to divest at the moment. The short-sharp format is bringing together unconditional buyers to put forward their best offer in a transparent method.

“Allowing bidders to determine market value has been very beneficial for our clients, with our recent auction reserves being smashed by tenants who want to move into owner-occupancy; existing owner-occupants who are looking to upgrade; and landlords who simply appreciate the importance that good quality assets are playing in the national recovery.”

Elias said there were high net worth property investors recalibrating their portfolios of late, adding more commercial property to their mix. “Those enquiries are mainly for stock in the sub-$10m bracket,” he said.

“We’ve seen yields in residential markets, especially in the city, compress significantly over the last year. “We’re still seeing yields tighten in the industrial market. However, by comparison, Western Sydney yields are very favourable for astute investors ranging from 3.5% to 4.5% for lower-grade stock.”

For more insights, trends and opportunities across Australia's industrial, retail, office and other sectors, take a look at our flagship network publication, Commercial Magazine.