If you own industrial real estate — whether it’s a warehouse, distribution centre, or factory, and you’re leasing it out, you’ve probably asked yourself: “Am I charging the right rent, or am I undervaluing my property?” Or maybe you’re wondering, “How can I really maximise my returns and get the most out of my investment?”
We understand that as a property owner, you want to make every dollar count. But when it comes to pricing your real estate industrial investment, it can get quite tricky.
As much as you want to maximise your returns, you don’t want to risk overpricing your industrial commercial real estate. Doing this may scare off your prospects or potential tenants, while underpricing it could lead to huge losses. Either way, without a professional valuation, you could risk delaying your return on investment, which can ultimately affect your long-term gains.
So the question remains, how do you strike a balance and make sure your industrial real estate’s valuation is accurate? That’s exactly what we’ll unpack in this blog.
Let’s start by understanding what qualifies as industrial real estate in Australia.
What Qualifies as Industrial Real Estate?
Industrial real estate includes properties used for manufacturing, warehousing, storage, logistics, and distribution. These spaces are essential to the supply chain. As e-commerce and infrastructure projects continue to grow across Australia, the demand for these properties also continues to increase.
In fact, according to Jones Lang LaSalle (2025), Q4 last year was the strongest quarter for Sydney’s industrial property market, with the vacancy rate dropping to 4.2%. While Melbourne still leads with a 3.31% vacancy rate and a 17.2% rental growth (compared to Sydney’s 5.3%), Sydney is set to make a strong comeback once some major industrial developments are completed.
As the demand for industrial real estate grows, it’s vital for both investors and property owners to understand how to accurately value these industrial properties.
Let’s explore the main factors that can influence the value of your industrial property.
8 Essential Factors that Drive the Value of Your Industrial Real Estate
When valuing your industrial real estate, it’s not just about how big the building is or where it’s located, there are more factors that come into play. Whether you’re leasing out a warehouse, managing a factory, or planning to sell your industrial commercial real estate, knowing what drives its value is vital to maximising your returns.
Let’s break down the major factors that can boost (or limit) your property’s value:
1. Location and Accessibility
We all know location is a big deal, but when it comes to industrial real estate, it’s really about how accessible your property is, especially to highways, ports, rail lines, and airports.
The closer you are to major transport routes, the more appealing your site becomes—particularly for businesses in logistics, warehousing, or manufacturing. For example, if trucks can get in and out easily and you’re well-connected to transport routes, your property becomes way more attractive to tenants, which means you can get better rental yields and a stronger valuation.
2. Property Size and Shape
In industrial properties, bigger can be better—but only if the shape and layout make sense. For instance, a large, rectangular block with a big yard, has wide access for trucks, and a practical layout will usually get a higher value compared with an oddly shaped site with limited space, even if they technically have the same square metres.
Huge spaces are also convenient for businesses who plan to expand their facility. Tenants love efficiency, and if the space works well for their operations, it instantly becomes more attractive to them, making it more valuable.
3. Zoning regulations
Imagine finding the perfect industrial site, only to realise that you can’t use it the way you planned. This is how zoning works and though it’s crucial, most people tend to realise its importance too late.
Local council rules dictate what you can (and can’t) do with your land. So if your site has broad or flexible industrial zoning, that’s a win for you as it gives you more freedom to lease to different types of tenants, expand your operations, or even redevelop your site later.
But if zoning’s too restrictive, your options (and your potential returns) will also be limited. That’s why it’s so important to understand your site’s zoning restrictions right from the start.
4. Building Specs, Age, and Overall Condition
Let’s face it: older buildings can mean more maintenance and you would have to make more upgrades for your industrial real estate. If your property is run-down or it no longer meets your tenant’s needs, its value may decrease due to lower rents being achieved.
While newer facilities or recently renovated sites are often more appealing and can attract higher valuations. For instance, if you have a modern, well-equipped logistics facility, you can get better rental returns, especially when you’ve set up smooth and efficient operations from day one.
5. Recent Market Sales and Demand
Like any property type, current market trends and comparable sales nearby play a big role in how much your industrial site is worth. If there are similar properties near your industrial real estate which are selling fast and the market generally shows low vacancy rates, it’s a good sign that your property’s value could increase as well.
But, if the market slows down or there’s a sudden oversupply of similar properties in your area, your industrial commercial real estate’s value may also drop. That’s why it’s important to stay on top of the latest market trends, not just the highs, but the dips too—so you can plan ahead and make strategic decisions.
6. Technology Level and Future Development Potential
If your site has room to expand or the potential for a full-scale redevelopment, that can also boost its value. Some valuations even factor in what could be built or upgraded later, especially if zoning allows for it. But it’s not just about physical space, the level of technology and infrastructure which are already in place matters too.
Industrial properties equipped with smart systems and automation capabilities, or those which promote energy efficiency become more appealing to modern tenants. In fact, a report from the International Energy Agency (2019) found that people and businesses are willing to pay more for green buildings, both when renting (at least 2.1% more) or when buying (at least 8.5% more).
So if your site is both scalable and tech-ready, you’re already a step ahead.
7. The Bigger Economic Picture
The economy also plays an important part in shaping industrial property values. Things like interest rates, inflation, and the overall demand for warehousing or logistics space all come into play.
For example, when e-commerce is booming, there’s often a spike in demand for storage and fulfilment centres and this can push industrial property prices higher. While, if the economy slows down, that demand and property values can decline as well.
8. Climate and Environmental Factors
Environmental risks can also affect the value of your industrial real estate. Contamination, flood-prone land, or being in a bushfire zone can quickly raise red flags not just for property valuers, but also for insurers, and your potential buyers.
These risks don’t just impact safety, they can also mean higher maintenance costs and stricter compliance requirements, which can be a turn-off for buyers and tenants.
The value of your industrial real estate is shaped by a mix of physical, financial, and market-driven factors. And when you know what drives your property’s value, you’re in a better position to make smarter decisions, when leasing, selling, or investing.
How IPV’s Accurate Valuations Allow You to Maximise Returns
At Independent Property Valuations (IPV), we give you the most accurate and up-to-date valuations tailored to your specific property. We also take the time to know what makes your industrial property stand out—from its location and size, to zoning, building condition, and current market trends.
It’s not just about the numbers. Our goal is to give you a clear, honest picture of where your property stands and its full potential. So you’ll be better equipped to lock in a stronger lease, plan for a smart upgrade, or know when it’s the right time to sell.
Our thorough and evidence-based valuations can help you understand your property’s best use for you to get more value and maximise your returns.
Final Thoughts on Valuing Your Industrial Real Estate
Getting a professional valuation is the first step to making the most out of your industrial property. When you know what your property is truly worth, you can confidently set the right rent or price it correctly if you’re planning to sell. And when you understand what really drives your property value—like being tech-ready or having more flexible zoning options —you’ll be in a much stronger position to maximise your returns.
Let’s help you discover the true value of your industrial real estate.
Reach out today for a detailed, accurate valuation—so you can maximise your returns and grow your investment.