Malaga property market heats up as businesses look to the future

Ben Flanagan, Burgess Rawson commercial and industrial services sales and leasing consultant, said the rental prices ranged from $80 to $100 a square metre, plus outgoings, with lease terms varying from two to five years.

Mr Flanagan said the tenant uses varied from warehouse storage, building service contractors to small-scale engineering businesses expanding their footprint in Malaga.

“We are finding most tenants are looking to take lease terms as long as they reasonably can to tap into the great lease rates that are currently on offer,” Burgess Rawson commercial and industrial services director Chad Henville said.

This 11.2 hectare site at 10 Bonner Drive, Malaga, was sold for about $20m by Knight Frank in October. Photo: Supplied

Altegra Property metropolitan markets sales and leasing director Anthony Morabito said there had been an increase in leasing activity in Malaga during the last quarter of 2017.

“This seems to be driven by renewed mining and resources activity, predominantly focused around new contracts for maintenance services and existing mine expansion,” he said.

“We remain hopeful that this momentum will carry forward to 2018 and will start to generate further activity and confidence down the supply chain, further filling current industrial vacancies.”

According to Colliers International, industrial leasing was picking up slowly but the new activity recorded was broad and not limited to Malaga, which was a big employment centre with a lot of new A and B-grade industrial stock.

“With residential areas on all its boundaries, Malaga has also established itself as a successful second-tier large-format retail area but after a fairly rapid expansion, we are now seeing some longer-term vacancies on its showroom strips on Marshall and Beach roads,” Colliers International industrial services director Stephen Baker said.

Knight Frank industrial sales and leasing executive Sam Hammond said the Malaga market had been slowly improving in 2017, following three years of subdued activity.

This building at 1-9 Tanunda Drive, in Rivervale, comprising 1208 square metres of office space was leased by Ray White Commercial for a five-year term. Photo: Supplied

“In the last three months, I’ve leased 18,500 square metres of industrial accommodation over three properties in Malaga alone,” he said.

Daniel Romeo, Raine & Horne Commercial WA sales and leasing consultant, said after a year on the market, he had just leased a green title, 4000-square-metre property, to a construction company.

After no interest all year, he said he had six groups view the property from October.

“Since September and October, we have seen a big increase in inquiries and people putting pen to paper,” Mr Romeo said.

In Belmont, Ray White Commercial WA had recently sold four properties, including a 443-square-metre, strata-titled warehouse for $750,000 after it had been on the market for almost a year.

Another 755-square-metre, strata-titled office warehouse sold for $1.2 million before it hit the market.

The warehouse at 26 Westchester Road, Malaga, was leased by Burgess Rawson. Photo: Supplied

A 997-square-metre parcel of land with an older-style, office-warehouse at 153 Francisco Street is under offer for an undisclosed sum, Ray White Commercial WA director Chris Matthews said.

“These deals are a positive sign seeing that buyers’ confidence has increased and they are now willing to transact,” he said.

“What’s interesting is that all properties were sold to owner-occupiers who aren’t necessarily basing their purchase price on the underlying yield and have therefore paid slightly more than an investor would have.”

Ray White Commercial have also reported an increase in commercial and industrial leasing.

Mr Matthews said lease deals included office warehouses ranging in size from 500 to 1100 square metres, and office tenancies in the sub-350-square-metre space.

A property at 1-9 Tanunda Drive, in Rivervale, comprising 1208 square metres of office space was leased by Ray White Commercial for a five-year term.

“Given the surplus parking available we identified an alternate use other than just office and structured the marketing towards the training and education sector,” Mr Matthews said.

“We secured Amana Living as a tenant who are now using it for their new training facility.

“It was a great outcome for the owners. In the current climate it’s not easy sourcing a tenant for a 1200-square-metre floor plate in the suburbs.

“The key is looking outside the box and seeing what other uses could work for buildings.”

Colliers International industrial agency executive Jeremy Parasiliti said inquiry levels for office and warehouse properties in Belmont had increased slightly but were still subdued.

“This is a cautious market and tenants are carefully weighing-up leasing decisions because rents are still a big-ticket expense,” he said.

“Belmont’s commercial property market contains a range of office and warehouse tenancies but is best known for its office component that has easy access to the CBD.

“Most of inquiries we are receiving for Belmont are from businesses that gravitate to the area because they need extra parking for staff or customers and don’t want to pay the levy that comes with parking bays in the city and West Perth.