Penrith Industrial Market Overview - March 2013 This is a guide to the industrial locations in Penrith, New South Wales. Penrith, about 50 km west of the Sydney CBD, is the main town centre serving the outer western suburbs of Sydney. The city is on the banks of the Nepean River, with Emu Heights/Plains west of the river, and with the main western railway line immediately north of the city centre. With 20 - 30 industrial sales transactions a year, the Penrith industrial estates are poised to benefit from an improved State economy.

NSW Economy and Industrial Market NSW continues to grow at a slower rate than the nation in general, with an annual growth rate in Gross State Product of 2.4% to June, well below the national average of 3.4%. The September quarter figures for State Final Demand show growth of 2.9% (Australia 3.1%) after inter-state trade is taken into account. 2.9% is an acceptable rate of growth in the current economic climate given the lack of mining revenue in the State. NSW should benefit from lower interest rates flowing through the economy and from below average unemployment. Demand in the Sydney metropolitan industrial market has strengthened in the past six months. For prime assets, demand has grown with both domestic and foreign institutional investors keen to purchase the best of the properties available, with demand growing strongly over the last six months of 2012. As a result, yields on prime property have begun to tighten and we are seeing capital value growth across all prime markets. In contrast, secondary properties are less in demand, experiencing low levels of enquiry and interest from both purchases and tenants, so the demand has yet to flow into the broader market.

Sydney West Industrial Market Penrith is in the region classed as “Sydney West” for industrial market purposes. To the west of Sydney, there has been high demand for prime properties from tenants, with strong leasing enquiry levels, for assets up to 8000 sqm. Companies seek to improve their operations and reduce property expenses by means of consolidation of their business premises, leading to an increase in the Penrith Industrial Market includes the locations of: demand for warehouses with higher office contact. · · · · ·

Penrith Jamisontown Emu Plains St Marys Kingswood

In contrast, the demand for secondary property has been soft during 2012, with limited leasing activity. There have been few land sales in Sydney West over the past year, although land values have remained stable. As the market improves, we are Property Market Update

Rental levels increased by 4% in 2012

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likely to see a change in the demand for serviced land that can be developed, with increasing interest in pre-commitments to new buildings from tenants. Prime rents have increased by over 4% during 2012 and are expected to increase further in the next year as demand from tenants increases. However, rents for secondary properties have not changed in the last year. Incentive levels have remained steady for both prime and secondary properties, though this may change in the coming year. The best prime property has been very much in demand from investors, particularly domestic and international represents, superannuation funds and institutions, who are interested in the best properties with secure long-term lease covenants. However there is a severe lack of such quality properties available. Reflecting this demand capital values of prime properties have increased by about 5% in the last year. The number of sales transactions fell to 306 in 2012, down 20% on the previous year. The total value transacted was $239,000,000 at a median price of $780,000. This activity level is about average for the last decade. The predominant market in Sydney West is for properties under $1 million, which represent 80% of all sales. Some 34 properties sold in the price bracket of up to $2 million, and 11 of up to $3 million, but this compares with 245 sales below $1 million.

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Penrith Industrial Market Guide The Penrith industrial market is a sizeable one, serving, as it does, the extreme western suburbs of Sydney. The main industrial areas comprise: ·

North Penrith, which comprises two precincts immediately to the north of the Penrith commercial centre.

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Jamisontown which comprises two separate precincts a little to the south of Penrith commercial centre, and close to the main highway.

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Emu Plains, across the river to the West of Penrith, a smaller area but with considerable land available for development.

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St Mary's, consisting of three precincts well to the east of the Penrith commercial centre.

·

Kingswood, a collection of smaller conclaves of industrial premises.

·

Mulgrave and Richmond, to the north of Penrith itself.

North Penrith

Jamisontown

Emu Plains

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St Mary’s

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Penrith Industrial Zones Penrith comes under the control of Penrith City Council. The zoning map below is reproduced from the Development Control Plan 2010 issued by the council, section D4 industrial development.

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Penrith Sales Transactions The value of property transacted each year has varied between $15 million-$30 million over the past decade. Most sales of higher value properties were registered in Penrith and Jamisontown, though Mulgrave saw a spike in activity in 2011. In terms of the number of sales transactions below $10 million per sale, Jamisontown has been the most active area, reflecting the larger number of smaller units and properties available. However, considerable numbers of transactions have been registered in Penrith and Mulgrave and Emu Plains. In New South Wales, it can be difficult to track the number of sales with a high degree of accuracy, since the numbers vary depending upon the data source. In compiling this data, we have relied on the data collated by RPData which we find to be the most comprehensive source for this location. The median price, the typical sale price, varies considerably from year to year, but over time has clustered around $800,000 per property. There is a ready market for strata units and smaller single properties, that sell under $2 million, with typically 15 to 20 sales a year being recorded in this price bracket. At the cheaper end of the market, sales cluster in the range of $200,000$600,000, while a healthy number of sales occur between $1 million and $2 million.

Small units below $600,000 are in demand Property Market Update

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Penrith Industrial For Sale Currently there are about 120 properties for sale in the Penrith region, some of which are multiple units advertised, and of which 80 have asking price details. This includes 18 parcels of vacant land for sale, with asking prices in the range of $200/sqm to $440/sqm, with most land priced around $250/m2 to $300/m2, depending on position, level of development and services. Showrooms for sale have asking prices of $1,400/sqm to $2,000/sqm and are contingent upon position and exposure. Warehouse units have asking prices mostly in the range of $1,400 to $2,000 per sqm. A small number of larger office/warehouse buildings are for sale typically priced around $1,000 per sqm. Of the properties for sale, 35 are small strata style warehouse units. Penrith and St Mary's are the most active markets, accounting for two thirds of properties for sale on the market. Similarly, of all properties, two thirds of those advertised for sale are warehouses.

Industrial properties for sale, asking price vs. building size in sqm. The background picture is of a new industrial warehouse in Emu Plains offered for sale by LJH Commercial.

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Penrith Industrial For Lease Currently there are about 100 properties available for lease in the Penrith region, of which we have tracked details on 75 of them. Basic warehouses generally have an asking rent in the range of $60 to $100 per sqm gross. Those that have offices have asking rents up to $155 per sqm, depending on the extent of the office component, which can range from a small room or mezzanine area, up to a fully fledged office environment. Rents on very small properties can have a higher rate per square metre, but generally are priced with with reference to the dollar value, with rents from $6000-$15,000 per year. At the other end of the scale larger properties up to 2,500 sqm typically have rents of between $50 per square metre to $100 per square metre. An influence with larger properties is the amount of yard or land space available surrounding the property. The average rate of rental for properties for lease tends to be in excess of $100 per sqm although the median rent is closer to $90 per sqm Of the 75 properties available for lease that we have tracked, two thirds of them are listed as being in Penrith, with the majority being smaller established industrial units. A significant portion of properties for lease are available in St Mary's, where we have noted 16 for lease at this time.

Typical rental level is $60-$100/sqm gross Industrial properties for lease, asking rent vs. building size in sqm. The background picture is of a stylish factory unit in Arndell Park, complete with office on the first floor, offered for lease by LJH Commercial.

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Penrith Industrial Land With its location at the western extremity of the Sydney metropolitan area, Penrith offers a good choice of development land. Most of this is situated in St Mary's, but Emu Plains also offers a good range of land parcels. Most of the land parcels offered for sale consist of serviced lots, ready for development, being approximately quarter acre to a half acre in size. These are generally priced from $400,000$550,000 each, which averages some $250-$300 per square metre. Larger parcels are available, ranging in size from half a hectare to one hectare. These are priced between $1,350,000-$2,500,000. The price range represents anything from $200-$400 per square metre, depending on location, the extent to which Land offered for sale by LJH Commercial. Level industrial land 2,010sqm - 16,270sqm (approx) in Emu Plains. it is serviced and the suitability for subdivision.

Typical land values are $250-$300/sqm

www.ljhcommercial.com.au This report has been prepared with the assistance of data and analysis from Propell National Valuers and other sources.

www.propellvaluers.com

This information is provided in good faith and on the assumption that data sources are accurate. It is general information only and not a comprehensive analysis and should not be relied on as such. Any reproduction of the contents should acknowledge LJH Commercial and Propell National Valuers as the source. Neither LJH Commercial, Propell National Valuers nor any person involved in the production of this report accepts any liability for its contents. Forecasts and commentary are based on a set of assumptions which may change.

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