Tag: Perth

Residential vs Commercial Property Investments – What’s The Difference?

Whether you’re new to property investment or you’ve invested in residential properties in the past and are now ready to buy a commercial property, this guide will give you an overview of the differences between the two types of investments.

What is a commercial property?

A commercial property, or commercial real estate, is a piece of land or building that is used for activities that generate profit, rather than residential purposes.

What are the benefits of buying a commercial property?

It’s often said that residential property investments come with fewer risks. While that might be true in some instances, there are plenty of reasons for investors to choose to buy a commercial property:

Higher rental yields

The rental yield is the profit you make from the property, it’s the difference between your costs and the income (rent) that the property generates.

Rental yield for commercial properties is higher than residential properties. Overall, rental yield is one of the main aspects of a property that you should consider when comparing commercial properties for sale.

Bigger cashflow

 Because of higher rental yields, commercial properties are more likely to be cash-flow positive than their residential counterparts. Moreover, commercial properties can count on fixed annual rent increases, as discussed further down this guide.

Long-term tenants

Commercial leases are on average much longer than residential ones. That’s because finding a tenant for commercial properties is more time-consuming than finding a new tenant for a house or apartment.

Tenants that care

Because commercial properties are used to host and run businesses, tenants tend to give great care to the upkeep of thr property.

Low maintenance costs

Tenants often sign “net” commercial leases, meaning that they commit to taking on any strata fees, maintenance and repairs costs, and other property outgoings. This is unusual for residential properties, but it’s the norm in the world of commercial properties.

Locked-in rent increases

One of the great benefits of buying a commercial property is that commercial leases often include locked-in annual rental increases (between 3-4%). If the percentage of increase is higher than the current level of inflation, your annual gain will be significant.  

How to buy a commercial property?

Unlike residential properties, buying a commercial property requires more business acumen and due diligence. Here’s why:

Economic earthquakes

Commercial properties are subject to changes in the economic landscape. Sudden changes in the economy, for example, might cause your property to be vacant for a longer prior of time

Finances

To purchase a commercial property, you need to apply for a business loan – which is different from a normal home loan. They require a higher deposit, usually around 30%, and interest rates and fees are higher.

On average if you’re investing in commercial property, you need deeper pockets than the average residential investor. 

However, commercial investments come in all shapes, sizes… and prices. Multimillion-dollar investments might be out of reach for most, but there is plenty of more accessible options such as office spaces for $400,000 or parking lots for $100,000! 

Property Value

It’s often said that commercial properties have a lower capital growth than rental investments. Many agree to disagree on this topic, but it’s definitely something you should keep in mind if you’re interested in learning more about how to buy a commercial property.  

The value for residential properties is linked to potential for capital growth, because they have a high potential, and because rental yields are not as important when owner-occupier buyers and investors are interested in the same property.

For commercial properties, the value is calculated based on the ROI from the tenanted property. If you’re companies commercial properties in Perth, start by calculating the rental yield and comparing them.

Interested in buying a commercial property in Perth?

Read our 8-pages guide to commercial real estate investment or contact Ross Scarfone today. 

Perth Commercial Property Outlook 2021

Perth Commercial Property Report for 2021

There’s no doubt that the uncertainty of 2020 left its mark on the commercial property market across the country. We were lucky here in Perth, where the health effects of the pandemic were barely a blip and hard borders kept our state’s economy ticking over. And while our minimal lockdowns affected retail strips, commercial and industrial businesses were often considered essential and able to keep operating.

While some Australian cities saw industrial and commercial real estate transactions drop during the COVID-19 period, Perth’s were up 10.70 per cent, with $828.69 million in industrial property transactions.

All this leads to good news for the Perth commercial property market.

With the rest of Australia now recovering well from the COVID recession, interest rates low, and both state and federal governments investing in stimulus packages, it’s a perfect time to look into the future with our 2021 commercial real estate report 2021.  Here are our 5 big takeaways for this post-pandemic year.

Commercial Real Estate Prices 2021

While 2020 saw small drops in median prices across much of Perth, things are stabilising. Thanks to a long period of low-interest rates, there’s no shortage of money. And as far as investors are concerned, commercial property offers secure long-term income with better yields than bonds. This means we are seeing a lot of investment interest in commercial property and values are holding steady. We expect them to remain stable in the near future, and start increasing over the next 12 months as stock levels are low and the demand remains strong.

Commercial Property Vacancy Rates in 2021

The vacancy rate for commercial and industrial real estate in Perth is low. And with strong demand and low stock, it will decrease even more.


For investors, this means more security and better yields because you are less likely to face lengthy periods with no tenant. And if you can get a new tenant quickly, you will be getting the return on your investment, rather than paying interest on a loan for which you are getting no income. As far as rental returns go, rents have been stable for a while, and we don’t expect big rent hikes. However, low interest rates mean more rent in your pocket, not the banks.

Commercial Real Estate Demand in 2021

We’re seeing strong demand for commercial and industrial real estate in Perth. And stock levels are dropping. We’ve recently received multiple offers on a single property more than once. Strong demand and limited supply tend to lead to price increases over time. This makes commercial and industrial real estate a sound investment option.

Sellers’ Market

For the past few years, the Perth commercial property market has been a buyers’ market. We are at an interesting stage now where we are seeing good demand from buyers and stock levels reducing. We’re watching the market shift to a sellers’ market. But what does this mean in practice?

In a buyers’ market, there are more commercial and industrial properties on the market than there are buyers for those properties. This puts downward pressure on prices to shift stock that may otherwise stay on the market for a while. Although a buyers’ market makes commercial property more affordable, it may also indicate lower growth over the short term. Unless the market improves – which is what is happening in Perth right now.

When there is more demand than supply, properties sell more quickly and at a good price. There is less likely to be negotiating on prices because sellers have the power.

Properties may also sell the list price as buyers compete with each other to secure an investment property.

Perth is currently in that sweet spot between buyers’ and sellers’ market – the perfect time to invest.

It’s also not uncommon for properties to sell above their list price in a seller’s market as buyers compete for the hottest commodities.

Hot Commercial Real Estate Suburbs in 2021

When you think about where to buy your next investment property, you want to have a look at the supply and demand of property in the suburb or area you’re interested in. As specialists in outer-suburban commercial and industrial real estate in Perth’s South East, we get a good idea of the hot suburbs to invest in. We continue to see good demand for the industrial properties both in Welshpool and Kewdale, as well as for smaller properties in surrounding suburbs such as Carlisle, East Victoria Park and Cannington. These suburbs are all easily accessible to Perth airport, freight rail line and major freeways.

Great time to invest in an industrial property 

As you can see from our predictions above, 2021 is shaping up to be an ideal time to invest in Perth industrial and commercial properties. If you are thinking about a warehouse, in particular, there are a couple of facts you should know:

  • According to the latest report from the Real Estate Institute of WA, the most affordable Perth regions to buy a warehouse are Perth’s North East and South East, with the lowest cost per square metre.
  • The South East accounted for 20 per cent of total warehouse sales across Perth in 2020.

For a detailed breakdown of the Perth commercial real estate market or specific advice on warehouses for sale in Perth, call or email Ross Scarfone Real Estate. Our agents specialise in industrial and commercial real estate in Perth’s southeast corridor including BelmontWelshpoolKewdaleVictoria Park and surrounding areas.

We would love to help you build your portfolio, contact us today.

  • This field is for validation purposes and should be left unchanged.

Perth’s 2020 Commercial Property Report: Office

Last month REIWA released their quarterly Perth commercial property market report that revealed the sales statistics of all the commercial properties sold in Perth during the 12 months to September 2019.

We’ve focused on the commercial report on office sales in Perth to analyse what the commercial property market has done in the 12 month period and what you might expect for commercial property sales for 2020.

Perth Commercial Property Sales

Perth office sales in the September quarter increased by 8.5% from last year to record 255 office sales. In comparison, showrooms had a 30.9% growth in sales and warehouses for sale continued to feel the effects of the WA’s flat market with a 12.9% decrease in sales.

Perth Office Sales

Compared to the 12 months to September 2018, the September 2019 report showed an 8.5% increase in Perth office sales, but a 24% decrease from 5 years ago.

Perth Office Sales by Region

When we looked at where the office sales were coming from in Perth, there was no surprise that inner Perth had the highest number of offices sales with 132 in the September quarter.

Following that there were two standout regions: South West – 42 sales and South East – 39 sales.

The majority of Perth had fewer office sales than the September quarter in previous years, with the only improvement in Perth Inner and Perth’s North East.

Of the areas with over 20 office sales per quarter, Perth’s South East has had the most consistent level of sales for the past 5 years. The area has maintained around 40 sales per quarter for the last 5 years, apart from a standout quarter in 2016.

perth-office-for-sale-by-year

What are Perth Offices Costing per Square Metre?

Of Perth’s office sale regions, Perth’s North West overtook Perth Inner as the highest priced per square metre for the first time at $4,741 per square metre – increasing by 17.2% from last year.

Inner Perth continued to be highly priced per square metre at $4,430, decreasing by 25.1% in the last 5 years, but closely followed by Perth’s South West at $4,400sqm which had increased by 15.5% in the last 5 years.  

Perth’s South East is the lowest priced region in the metro area, at $3,852 per square metre, and has been for three years in a row.

When we looked at the historical data for cost per square metre, we could see that most Perth areas are still recovering from price highs from 2015, with only South West and Mandurah achieving higher prices per square metre than 2015.

 Change from 2015Change from 2018Avg in 2019
Perth – Inner-25.1%-9.3%$4,430
Perth – North East-14.2%+11.7%$4,052
Perth – North West-1.2%+17.2%$4,741
Perth – South East-13.3%+8.4%$3,852
Perth – South West+15.5%+13.1%$4,400
Mandurah+15.8%-38.6%$2,479
Greater Perth-17.7%-1.5%$4,195
Cost per Square Metre

Top 5 Suburbs in Perth for Offices for Sale

Four suburbs in Perth’s Inner topped the list of highest selling for office properties, accounting for 36% of all Perth’s office sales. Como has 9 office sales and accounted for 21% of office sales in the South West region.

 SalesPer cent of total sales
East Perth3815%
Perth218%
Subiaco208%
West Perth145%
Como94%
Top Suburbs for Office Sales in Perth

Summary of Perth Office Sales by Region

perth-office-for-sale-by-perth-region

If you’re looking to invest in buying an office in Perth for 2020, here are our top takeaways from September 2019’s quarterly report on commercial property:

  • If you’re looking for short term consistency in pricing, Perth’s South East regions in areas like Belmont, Cannington, Victoria Park and Burswood.
  • Perth’s Inner region of suburbs like Perth CBD, East Perth, Subiaco and West Perth have averaged the highest price per square metre for the last 5 years but have also declined the most in 5 years.
  • The most affordable Perth regions to buy an office are Perth’s South East and Mandurah, with the lowest cost per square metre.

For a detailed breakdown of the Perth commercial real estate market or specific advice on offices for sale in Perth, call or email Ross Scarfone Real Estate. Our agents specialise in office, industrial and commercial real estate in Perth’s south-east corridor including Belmont, Welshpool, Kewdale, Victoria Park and surrounding areas.

Get articles & reports in your inbox

  • This field is for validation purposes and should be left unchanged.

Perth’s 2020 Commercial Property Report: Warehouse

Last month REIWA released their quarterly Perth commercial property market report that revealed the sales statistics of all the commercial properties sold in Perth during the 12 months to September 2019.

We’ve focused on the commercial report on warehouse sales in Perth to analyse what the industrial property market has done in the 12 month period and what you might expect for commercial property sales for 2020.

Perth Commercial Property Sales

While certain Perth commercial property types had an increase sales in the year to the September 2019 quarter, showrooms had a 30.9% growth in demand and offices an 8.5% growth, warehouses for sale continued to feel the effects of the WA’s flat market.

Perth Warehouse Sales

Compared to the 12 months to September 2018, the September 2019 report showed a 12.9% decrease in warehouse sales and a 14% decrease from 5 years ago.

Perth Warehouse Sales by Region

When we looked at where the warehouse sales were coming from in Perth, there were three standout regions: North West – 60 sales, South West – 69 sales and South East – 67 sales.

What’s even more interesting is that both the South East and South West regions outperformed the previous year’s warehouse sales. Where the rest of Perth saw fewer warehouse sales than the previous year.

The South East Perth region was the only area to record higher warehouse sales than 2017, and in fact recorded its highest warehouse sales since 2011, showing promising signs for the area that includes Belmont, Welshpool, Kewdale and Victoria Park.

warehouse-for-sale-perth-by-region-2020

What are Perth Warehouses Costing per Square Metre?

Of Perth’s warehouse sale regions, Inner Perth continues to be the highest cost per square metre at $4,969, growing 9.4% in the last 5 years.

When we looked at the historical data for cost per square metre, we could see that two areas retuned to the higher prices that were seen in 2015, while the remainder continued to see the effects of the slow Perth market.

 Change from 2015Change from 2018Avg in 2019
Perth – Inner+9.4%+20.9%$4,969
Perth – North East-20.4%-7.4%$1,638
Perth – North West-11.6%-3.0%$1,822
Perth – South East-11.4%+1.9%$1,792
Perth – South West+0.5%+2.0%$1,792
Mandurah-14.6%+72.1%$1,914
Greater Perth-9.7%+0.1%$1,835
Cost per Square Metre

Top 5 Suburbs in Perth for Warehouses for Sale

Two of Perth’s North East suburbs topped the list for most warehouses sold in Perth, Wangara and Malaga, contributing 72% of warehouse sales for Perth’s North East region. With North West suburb O’Connor recording 21 warehouse sales, and South East suburbs Canning Vale and Forrestdale combining for 35 warehouse sales.

 SalesPer cent of total sales
Wangara2812%
Malaga229%
O’Connor219%
Canning Vale219%
Forrestdale146%

Summary of Perth Warehouse Sales by Region

perth-warehouse-sales-by-region

If you’re looking for to invest in buying a warehouse in Perth for 2020, here are our top takeaways from September 2019’s quarterly report on commercial property:

  • Warehouses in Perth’s inner continued to increase their value during a tumultuous 5 years of Perth’s commercial property market, increasing cost per square meter by 9.4% compared to the average Perth decline of 9.7%.
  • The South East is showing the strongest signs of recovering from Perth’s slow market by selling the greatest number of warehouses since 2011.
  • The most affordable Perth regions to buy a warehouse are Perth’s North East and South East, with the lowest cost per square metre.

For a detailed breakdown of the Perth commercial real estate market or specific advice on warehouses for sale in Perth, call or email Ross Scarfone Real Estate. Our agents specialise in industrial and commercial real estate in Perth’s south-east corridor including Belmont, Welshpool, Kewdale, Victoria Park and surrounding areas.

Get articles & reports in your inbox

  • This field is for validation purposes and should be left unchanged.

Find The Perfect Warehouse to Lease With Tips From Commercial Property Experts

If you’re thinking about a new warehouse to lease in Perth, or anywhere, it can be an overwhelming task and unless you’re a commercial property expert, it’s easy to feel that you’re under-informed. All of this can lead you to make a poor decision on the warehouse you rent and it having a significant impact on how your business runs for the length of the lease.

Fear not! We’ve gathered some Perth commercial property experts to put together a list of easy to understand tips that will help you be better informed when looking at Perth warehouses to lease and put you in a better position to negotiate the price of your rent.

What To Do Before You Start Looking at a Warehouse to Rent

Plan Ahead…Far Ahead

Looking for a warehouse to rent just before you need one puts you under pressure to find one to lease and it puts you in a weaker negotiating position. The longer lead-in time you give yourself before you need to lease a warehouse, the better your negotiating position will be. You’ll be more informed of what properties are available and how the warehouses you’re considering compare to others that have been in the market.

Planning at least 6 months in advance will also give you enough time to better understand the requirements you have for your next warehouse rental. In this time, you’ll be able to speak to your managers to learn what they think the features of your next warehouse should be. For example, you may need extra loading bays, larger office space or more advanced safety requirements.

Keep an Eye on the Commercial Property Market

By monitoring the commercial real estate market in Perth, in particular warehouses to lease, you’ll give yourself the opportunity to jump on a deal if the market dips. This could end up saving you thousands of dollars in rent each year.

If you’re watching the warehouse lease listings of local commercial real estate agents, you’ll also be able to see which have been sitting on the market for the longest time. This could mean that the owners are eager to get the warehouse leased, giving you an opportunity to negotiate better terms.

Commercial Property Expert Tip #1:

The latest warehouses on the lease market will usually sit at the top of the major commercial real estate websites, but sometimes old listings will be advertised at the top of the list. To get the best understanding of which warehouses have been on the market the longest, head to the website of the commercial real estate agent to find their list of warehouses and head right to the back of the list.


Commercial Property Expert Tip #2:

Subscribe to the email mailing lists of the commercial real estate agents that lease warehouses in Perth. Commercial property agents will regularly send out emails and you’ll be the first to know when a new warehouse appears on the leasing market, and you can be the first to view it. Potentially meaning you won’t have any competition to lease the warehouse, and you will be able to negotiate better lease terms.

Know Your Limit

Before you even consider looking for a new warehouse to lease, you need to have a comprehensive understanding of what rent you can afford to pay. Once we see something we like, we all tend to push beyond our budget to get it. By setting a strict budget for what you can afford, you’ll reduce the risk of putting yourself in a risky financial position by overcommitting.

What to Look for in a Warehouse to Lease

Now that you’ve done your research and are prepared to start looking at warehouses to lease in Perth, here are a few tips from commercial property experts on what to look for.


Think More than Square Metres

When looking at a warehouse to lease, you not only need to think about square metres, you need to think about cubic metres. The cubic meterage of the warehouse will allow you to calculate how much storage space you have.

When considering a warehouse to rent, it’s important to look at the height of the building and whether your storage racks, equipment and machinery will fit. Make sure to measure the height of the access doors as well when looking at the height of the warehouse, you need to be able to get your equipment inside the warehouse.

If you’re not storing stock in the warehouse or have tall equipment, you may not need to lease a warehouse with a high ceiling and can focus on finding a renting a warehouse with lower ceilings.

Commercial Property Expert Tip #3:

If you know which warehouse features are, and aren’t, valuable to your business before you start negotiations, you may be able to lease the warehouse for a lower rent. For example, some businesses will need a warehouse with a high ceiling and will end up paying more for this feature, but if high ceilings aren’t as valuable to your business, you can negotiate down the premium placed on this feature. 


Commercial Property Expert Tip #4:

When it comes to warehouse space, it’s better to overestimate what you need, rather than underestimate. You don’t want to be looking to lease a new warehouse in a years’ time because you’ve expanded beyond the space.

Will You Need Office Space?

Most warehouses for lease come with a small office for a manager to oversee the staff, but if you’re looking to run your entire business from one location, you’ll need an office warehouse to rent. Once you decide you need extra office space in your next warehouse, there are a number of additional factors to consider.

How Much Office Space Will You Need?

You can roughly calculate the square metres you’ll need for your office, by adding up the number of employees you’ll have in the office as either a:

  • Standard desk/cubicle
  • Standard Office
  • Supervisor/Manager work area
  • Supervisor/Manager Office

You can download the exact calculations in our guide How to Choose an Office Space to Lease in Perth.

What Office Features Will You Need?

Here is a couple to consider:

  • Male and female toilets
  • Lunchroom
  • Server room
  • Boardroom or meeting space.
  • Printer and stationary storage.
  • Kitchen

Ask About Everything

You should know a warehouse, inside and out, before you even start negotiations. There are a number of things that you could assume are up to scratch only to find out later that it’s not! Here are a few warehouse features you should ask about with every property you view.

  • Air conditioning and heating: This needs to be able to deal with your staff and any machinery that might be generating heat. If you have stock that needs to be stored at a certain temperature, you need a climate control system you can rely on. Enquire about the age of the warehouse’s systems and when they were last serviced.
  • Safety and security: Your entire stock and machinery inventory could be stored in your warehouse, not to mention your staff. You need a security and safety system that will protect everything in your warehouse from fire and burglary.  

Commercial Property Expert Tip #5:

If you’re going to be running machinery in your warehouse, potentially all day, you want to know that the warehouse’s wiring has the electrical capacity to handle the workload.

What Are Your Distribution Needs?

The distribution of your products and intake of supplies is a major aspect of your business and you need to know that the warehouse you lease will be able to streamline your receiving and distribution as much as possible. Here’s what our expert suggest you keep in mind when looking for a new warehouse to rent:

  • Loading docks: If you need loading docks, make sure they will suit the types of trucks you’ll be using and the area around the loading dock is large enough for them to maneuverer.
  • Access to freeways: How far will your vehicles have to travel to access the major freeways that can take them both around Perth and interstate?

Commercial Property Expert Tip #6:

Be aware of the council restrictions on heavy vehicles around the warehouse. Certain residential zones prohibit trucks and industrial vehicles from travelling through them, meaning you and your suppliers may have to go around the entire area.  

Speak to a Commercial Property Expert

If after reading this article, you’re still not sure of what your warehouse requirements are or where to find the perfect warehouse to lease, speak to the local commercial real estate experts at Ross Scarfone Real Estate. We specialise in commercial and industrial buildings for lease in Perth’s south-east corridor of Belmont, Welshpool, Kewdale and surrounds. You can view our entire list of warehouses and office warehouses to lease and request a tour of the available warehouse properties in the area.

Contact us today for all your warehouse real estate needs

  • This field is for validation purposes and should be left unchanged.

Guide to Perth Office Lease Negotiations and Contracts

Ready for a new office in Perth?

Before you do, read this 10-page office leasing guide and enter negotiations informed and confident.

In the guide you’ll learn:

🔘 When is the best time to look at offices
🔘 Calculating your projected growth
🔘 How many sqm per person you’ll need
🔘 Prioritising building features
🔘 Get the location you want for less
🔘 Understanding the lease agreement
🔘 Fixed vs variable rent
🔘 What is a “make-good” clause?

Make better business decisions

Whether you’re looking to grow your business, expand your investments or shift into a new market, if you need to lease office space in Perth there are a number of things you need to consider.

Leasing an office can be a daunting task, there can be a lot of money at stake and you could be making a choice that will impact the profitability of your business for the next few years.

In the free download “How to Choose an Office Space to Lease in Perth”, we take you step-by-step on what you need to do to successfully lease a Perth office that you’re happy with, starting from 6 months before you need to move.

Why You Need This Guide

Not only does this guide detail what you need to consider when leasing your ideal office, but it also includes tips on how to give yourself more negotiating power when it comes to signing a lease for a Perth office property.

We’ve created a guide of the top 8 questions you need to ask yourself before leasing an office. This guide is a must-read for any business looking to rent an office in Perth.

Download the guide to finding an office in Perth.

office lease perth
  • By submitting this form, you acknowledge that you have signed up for updates, have read the Privacy Policy and that you consent to the use and disclosure of your personal information set out in that policy.

  • This field is for validation purposes and should be left unchanged.