Industrial Property Case Study | Lidcombe, NSW
When both tenants at a dual-unit industrial facility in Lidcombe approached lease expiry simultaneously — each seeking rental reductions — the owner faced a defining decision. Rather than accepting below-market renewals, a structured industrial leasing strategy was implemented that repositioned the asset to market, protected long-term income, and delivered an estimated capital uplift of up to $1.14 million.
At a Glance
- Net Income Growth +17.9%
- Annual Net Increase +$62,680 p.a.
- 5-Year Net Benefit ~$260,000+
- Estimated Value Uplift ~$960,000 – $1.14M
- Vacancy Period ~1 month (Unit 2 only)
- Lease Structure Net lease (100% outgoings recoverable)
The Situation: Dual Lease Expiry Pressure at a Lidcombe Industrial Asset
The asset was facing a critical lease expiry position, with both tenants approaching rollover at the same time. Both occupiers sought rental reductions, placing immediate pressure on income and asset value.
The owner was presented with a key decision:
- Accept reduced rental income for stability, or
- Reposition the asset and reset to market rental levels
The Asset: Dual-Unit Industrial Facility, Lidcombe
- Dual-unit industrial facility in a tightly held precinct
- Unit 1: 1,227.7 sqm
- Unit 2: 991 sqm
- Strong underlying tenant demand
- Under-rented relative to market
- Structured as a net lease with full recovery of outgoings
The Strategy: Structured Lease Expiry Management
Rather than locking in reduced renewals, a structured lease expiry strategy was implemented:
- Rejected below-market renewal proposals
- Staggered lease expiries to manage risk exposure
- Repositioned both units to market net rental levels
- Implemented a targeted leasing campaign
- Secured long-term 5 + 5 year lease structures
The Result: 17.9% Net Income Growth
- Prior Net Income $349,815 p.a.
- Post-Strategy Net Income $412,495 p.a.
- Increase +$62,680 p.a (+17.9%)
A controlled vacancy period of approximately one month occurred in Unit 2, while Unit 1 remained continuously leased.
5-Year Financial Impact
- Additional net rental income: ~$313,400
- Total leasing & incentive costs: ~$52,900
- Net benefit: ~$260,000+
Capital Value Impact
Based on market capitalisation rates of 5.5%–6.5%:
Estimated capital uplift: ~$960,000 – $1.14M
Why This Industrial Leasing Strategy Worked
This outcome was driven by disciplined execution, not market timing.
- Lease expiry was treated as a value event, not a risk to be minimised
- Market evidence supported rental repositioning
- Risk was managed through a staged leasing strategy
- Net lease structure strengthened income quality and the asset’s valuation profile
- Long-term leasing improved buyer confidence and asset depth
Key Insight: Commercial Property Value Is Made at Lease Expiry
Most value creation in commercial property happens at lease expiry. Handled passively, it leads to income erosion. Handled strategically, it can materially rebase both income and capital value.
In this case, that difference equated to:
- +17.9% income growth
- ~$260K+ net financial benefit
- Up to ~$1.14M in estimated value uplift
Interested in understanding the leasing position on your commercial or industrial asset? [Get in touch with our Asset Management team.]