How long until commercial property is hit? Sydney Industrial units.

Discussion in 'Commercial Property' started by Illusivedreams, 16th Mar, 2020.

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  1. Illusivedreams

    Illusivedreams Well-Known Member

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    In light of the current situation and like many in our complex who depend on Chinese stock and other imports.

    How long until commercial (industrial complexes) come down in price.


    Sydney
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    How close to being locked out are they?

    Prices won't fluctuate until there are rental or mortgage defaults. When vacancy rates start to move, then there may be some negative impact on price.
     
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  3. Omnidragon

    Omnidragon Well-Known Member

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    There’ll be a few highly levered landlords going bust. Soon. Especially retail prime sites

    I knew someone in Melb Chinatown just bought a place for $15m. His $500k tenant just cracked it and forced shut his shop and isn’t paying rent. I really shouldn’t be saying lol
     
  4. Beano

    Beano Well-Known Member

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    What about the other tenants are they paying the rent ? (I assume he brought the property at 6pc yield)
    What is the vacancy rate like in Melbourne Chinatown ?
    Two year bank bond being held by the landlord ?
    Under rented so easy to re-lease ?
    No borrowings so can weather the vacancy ?
     
  5. Omnidragon

    Omnidragon Well-Known Member

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    Nope no ones paying. 50% of Chinatown is shut. I was there yesterday.

    Even Jeff Xu shut Spicy Fish. West Lake is shut, Shark Fin (ex Jimmy) is shut. I reckon vacancy like 50% now - not vacant vacant but shut. Landlords all forced to give rent free or cut rent.

    Usual bonds are 3 months these days in Melb. Impossible to rerent in this market. Even if you found a new tenant they will want $200-300k cash incentive (for big sites), 6-12 month rent free in this market. I can tell you our family was offered that on a CBD site lol. Old hands have no borrowing, new hands normally do.
     
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  6. Beano

    Beano Well-Known Member

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    So about one and half months rent per year if lease...but in this climate they may not last the lease term
     
  7. Beano

    Beano Well-Known Member

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    Plus two months agents fee and perhaps a refurbishment too
     
  8. Beano

    Beano Well-Known Member

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    Where you offered 1.5mths per year of lease on a site you were looking at renting ?
     
  9. Omnidragon

    Omnidragon Well-Known Member

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    I was offered around 40% as an incentive. As cash upfront. Plus rent free. Oh and the rent had fallen 20% already. Stay cashed up now and swoop on
     
    Last edited: 21st Mar, 2020
  10. MTR

    MTR Material Girl Premium Member

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    Double whammy for Perth, industrial and commercial yet not recovered from 2007, this will be another kick in the guts
     
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  11. Beano

    Beano Well-Known Member

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    Forty percent of one years rental ? Plus 1.5mth free rental is a really big inducement...the landlords must be hurting pretty bad.
    Re-selling the property .... the market value must have dropped 50%
     
  12. Omnidragon

    Omnidragon Well-Known Member

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    Lol they are
    All the tenants in Emporium and Melb Central have gotten together and gotten pollies involved and are basically refusing to pay rent

    So this is like china. When people aren’t poor they all do cultural revolution and crucify landlords. Easy target. Tell the stupid state Govt to stop charging ridic land tax.

    If they stop charging me ridic land tax I’ll give it all back to tenants and do my part ... ridic pokies tobacco land tax addicted Govt
     
  13. # 1

    # 1 Well-Known Member

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    I heard Dazz is hurting pretty bad atm
     
  14. MTR

    MTR Material Girl Premium Member

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    Thats bad news, I thought his tenants were all blue chip
    I guess it depends on what industry
     
  15. Lacrim

    Lacrim Well-Known Member

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    Are you sure, bc from the posts I was reading yrs ago, he had serious cashflow coming in that would've/should've potentially reduced his gearing levels significantly (by now)?
     
  16. Omnidragon

    Omnidragon Well-Known Member

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    Haven’t seen him in long time. Didn’t he run for Liberals?
     
  17. Omnidragon

    Omnidragon Well-Known Member

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    Just drove around CBD today. Like a ghost town, almost. Feels like 1980s Melbourne when 1000 people lived in CBD (probably true now that overseas students and backpackers can’t enter). Expecting many families to fall in 2 months.
     
  18. Scott No Mates

    Scott No Mates Well-Known Member

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    I smell a few buying opportunities ;)
     
  19. Omnidragon

    Omnidragon Well-Known Member

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    Yea if you’re on cash you’ll clean up this cycle

    Many who built a fortune over 10 years will lose it overnight. The bigger your sme (eg 10+ restaursnts, car wash, multiple retail shops with debt) the faster you lose it - literally 2 months.
     
  20. croseks

    croseks Well-Known Member

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    One of my tenants called Friday, apparently was told by the gov that they have to shut up shop due to corona virus. I am waiting on confirmation to see what to do next but it's not looking too flash atm.
    We should be ok to hold it for the time being.