The Valuers' View - Industrial

July, 2020

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  • Industrial
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A survey of m3property Valuers

The Valuer’s View

In times of uncertainty where transactions are limited and new trends establishing, industry participants place even more reliance on Valuers to provide market guidance.

To assist lenders, investors and owners, the Valuers at m3property have contributed their opinions on the current state of the property markets and where they expect those markets to head over the next 12 months.

This is the second report in a series of papers on the major sectors of the Australian property market and focuses on Industrial property.

Key Industrial Sector Insights

  • The spread between prime and secondary yields is expected to widen as risk is re-priced.
  • Expect minor movement in face rents, with stronger movement in incentives, particularly for secondary stock.
  • Prime well-located assets are likely to largely hold their value, whereas secondary assets are likely to see values decrease as investors re-assess risk.

Value Comparison, by sector


Daniel McGrath


View Profile > QLD
Casey Robinson

National Research Specialist

View Profile > QLD

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Survey Results


“Yields for prime industrial property are holding, whereas secondary yields have started to soften”

Daniel McGrath
National Director Industrial


  • The spread between prime and secondary yields is predicted to widen as risk is re-priced in the industrial markets.
  • We are yet to see a material change to pricing for secondary assets. Agents and sentiment suggest a softening by 25 to 50bp.
  • There has been a small shift in the investment market over the last few weeks with an increase in potential purchasers looking to enter the market.


  • IRRs are likely to soften for industrial property due to lower growth rates and longer letting-up periods.


  • Prime net face rents have been stable across most markets over COVID-19 to date. However, we expect effective rents to decrease due to the increase in incentives landlords will be required to offer to attract new tenants.
  • Secondary rents may decrease due to rising vacancy.


  • There has been no material change in incentives to date with minimal deals. When renewals start filtering through after the code of conduct ends, an increase in incentives to keep the current tenant or attract new tenants is likely.


  • Changes to industrial property values are likely to be mixed.
  • Prime properties are expected to witness minimal changes while secondary assets are anticipated to see falling values.
  • Recovery for secondary assets is expected to take up to two years in some locations due to the reassessment of risk by many owners and investors.