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A 25,000 m² shed, on yield on cost.

Sample assumptions and the outputs Australian industrial developers decide on. Face rent, incentives, downtime and exit cap rate.

Scale25
Program30 months
Yield on cost vs market6.4% target

02 / Sample assumptions

The market context behind the numbers.

Pricing benchmarks, build rates and finance terms used in this industrial example. Every one is editable in Popurise.

Assumption sheet07 lines

Face rent: $190 / m² net
Incentive: 15% rent-free equivalent
Lease term: 10 years plus 5 plus 5
Downtime: 6 months from PC
Exit cap rate: 5.75%
Build rate: $1,650 / m² GLA blended
Senior debt: 55% LVR, 7.5% all-in

03 / Key inputs

The inputs that drive the deal.

Grouped the way Popurise groups them. Change a category, watch the industrial output set respond.

0105 items

Site and GLA

Site area: 58,000 m²
Site cover: 43%
GLA: 25,000 m²
Office %: 8%
Hardstand: 2,000 m²

0205 items

Cost stack

Land: $22.60M
Civils and hardstand: $8.40M
Tilt-up and office: $32.85M
Authority and contributions: $3.20M
Finance and leasing: $6.10M

0304 items

Leasing and revenue

Face rent: $4.75M pa
Effective rent: $4.04M pa
Stabilised NOI: $3.85M pa
Capitalised value: $67.0M

04 / Base case outputs

The output set, in full.

Every number a developer wants on the screen for a industrial deal, in one place.

Hero outputYield on cost vs market

6.4% target

Secondary metrics08 lines

Stabilised NOI
$3.85M pa
Exit value
$67.0M
Total development cost
$73.15M
Yield on cost
5.26%
Development margin
negative on base
Residual land at target yield
$15.4M
Equity IRR (held)
9.1%
Peak debt
$41.0M

05 / Scenarios

Base, downside, stretch. Side by side.

Three scenarios on the same industrial project. No copied files. The decision is which one to take to investment committee.

Base case

base

Land at $22.6M, current build rate, market face rent.

Yield on cost5.26%
Exit cap rate5.75%
Equity IRR9.1%
Spread to exit capnegative

Verdict

Yield on cost is below exit cap. The land price needs to come back to make this work.

Downside

downside

Face rent softens 5%, lease-up runs 12 months instead of 6.

Yield on cost4.78%
Stabilised NOI$3.65M pa
Equity IRR6.4%
Spread to exit cap−97 bps

Verdict

Negative spread. Lease-up risk dominates and the project does not stack.

Stretch

stretch

Back-solve land at the 6.4% yield on cost target.

Residual land$15.4M
Yield on cost6.40%
Equity IRR15.8%
Spread to exit cap+65 bps

Verdict

At $15.4M the land works. The bid sets the deal, not the build.

06 / Decision takeaway

Industrial feasibility is a land price decision dressed as a build decision. Yield on cost is the lens. Once the target yield is set, every other input is a sensitivity around the bid number.

Industrial feasibility solution

Open

Industrial feasibility model

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Questions

Industrial feasibility, answered.

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