The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
FULL PROGRAM RELEASED FOR URBANITY-25 CONNECTING PROPERTY LEADERS ACROSS THE ASIA PACIFIC
FULL PROGRAM RELEASED FOR URBANITY-25 WHERE THE PROPERTY INDUSTRY CONNECTS
VIEW FULL AGENDADETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
20
print
Print
IndustrialTed TabetFri 20 Nov 20

Demand Soars for Industrial Floorspace

0c90e3af-b06c-4c5c-b26e-da3b91d2ff61

Demand for industrial floorspace has continued to strengthen in the third quarter, with expectations that take-up of space will surpass the 10-year average at year’s end.

According to JLL’s research figures for the September quarter, national take-up so far this year has now reached 2 million square metres, with leasing activity at the highest level recorded since early-2015.

Driving the sector—as it did pre-Covid-19—has been a push for more automated warehouses to cater for the acceleration in online shopping and a more digitally-connected consumer.

Take-up over the third quarter has been led by Sydney, where 225,000sq m of industrial space was absorbed, and Melbourne where 235,100sq m was taken off the market.

Together, Australia’s two biggest cities captured 74 per cent of the nation’s total take-up across the quarter.

In Sydney, retail giants such as Williams-Sonoma and Amazon have signed up to new warehouses in the west, while the tech giant has also moved into a new facility at Dexus’ industrial estate in Ravenhall, Melbourne—doubling its operational footprint in Victoria.

JLL Australia head of industrial and logistics Jamie Guerra said the increase in demand from tenants looking for industrial space had been a nationwide trend.

Industrial Floorspace Gross Take-Up, Australia

^ Source: JLL Research, by city, as at 3Q 2020

“We have also seen an uptick in take-up activity for Adelaide and Perth over the quarter, reflecting a strong return in confidence in these markets post-Covid.

“The Adelaide market recorded a relatively significant rise in take-up—the largest volume since the fourth quarter of 2018.”

In Brisbane, the Charter Hall Prime Industrial Fund recently completed a new facility for a major global logistics company and signed new leases with Amazon and Australia Post at the TradeCoast Industrial Park in Pinkenba.

The acceleration of e-commerce has been driving demand for urban infill locations.

Australia’s e-commerce penetration has now reached a record 12 per cent as of August—a significant jump from 9.3 per cent in January.

JLL said rental growth has been stronger for inner-ring locations across major markets in Australia.

JLL’s Tony Iuliano said global capital will continue to be attracted to Australia’s industrial investment markets due to the country’s “safe haven” status, relatively resilient economy, dynamic industries and high innovation and skills.

“Investment appetite for the industrial sector has been consistently strong over 2020, which is maintaining competition and accelerating the upward pressure on pricing relative to commercial office markets.

“With manufacturing accounting for more than 20 per cent of gross take-up of industrial space in Melbourne and Sydney over the past 10 years, the announcement in the federal budget of the $1.5 billion Modern Manufacturing Strategy will add to growth of industrial and logistics space in both states,” Iuliano said.

According to recent findings from Colliers International, Sydney’s capital values for industrial property lifted to $2,732 per square metre in the third quarter of the year, from $2,700 in the first quarter.

Over the same period, prime Sydney yields tightened to 4.66 per cent from 4.75 per cent.

Melbourne industrial capital values rose 6 per cent between the first and third quarter of the year to $1,733 per square metre, while prime yields tightened by 31 basis points to 5.25 per cent.

ESR Absorbs 11-Asset Portfolio for $300m

Meanwhile, logistics giant ESR has absorbed a portfolio of logistics assets along the eastern seaboard from an ESR-managed partnership, Propertylink.

ESR has outlaid $302.5 million for 11 assets primarily located in the eastern seaboard cities of Sydney, Melbourne and Brisbane.

“This transaction represents a great outcome for our investors in both investment vehicles and our business,” ESR Australia chief executive Phil Pearce said.

“Propertylink Australian Industrial Partnership II (PAIP II), investors are achieving an exit in line with the fund’s original strategy.”

The acquisition will take gross assets in ESR’s Australia Logistics Partnership (EALP) to over $1 billion—spread across 36 properties with a gross floor area of over 500,000 square metres.


Hero image: ESR’s recently-purchased facility at 450 Sherbrooke Road in Brisbane’s Willawong.

IndustrialAustraliaSector
AUTHOR
Ted Tabet
The Urban Developer - Journalist
More articles by this author
website iconlinkedin icon
ADVERTISEMENT
TOP STORIES
Medium Density housing in NSW
Exclusive

NSW Budget 'Groundbreaking' $1bn Guarantee to Unlock Housing

Leon Della Bosca
7 Min
Exclusive

Azure’s Trent Keirnan on Playing the Long Game

Taryn Paris
5 Min
Exclusive

Private Credit Surge, Skittish Buyers Force Banks to Loosen Presale Rules

Taryn Paris
5 Min
Forme's James Place on James Street, Fortitude Valley Brisbane
Exclusive

Forme Pushes the Boundaries on James Street Precinct

Renee McKeown
4 Min
Exclusive

Invicta House Rebirth Proves Recipe for Heritage Success

Leon Della Bosca
7 Min
View All >
Residential

Supercharging Housing Supply is a Team Sport: Victoria Parker

Taryn Paris
Erben Perth Timber Tower
Build-to-Rent

Perth Timber Skyscraper on Global Map

Vanessa Croll
Roxy Pac's proposed 60-storey skyscraper at 33 Argyle Street Parramatta
Build-to-Rent

Green Light for Roxy-Pac’s 60-Storey Parramatta BtR Tower

Leon Della Bosca
The Singaporean joint venture moves on to the next stage of its Argyle Street skyscraper, that might once have hit 80 st…
LATEST
Residential

Supercharging Housing Supply is a Team Sport: Victoria Parker

Taryn Paris
3 Min
Build-to-Rent

Perth Timber Skyscraper on Global Map

Vanessa Croll
4 Min
Roxy Pac's proposed 60-storey skyscraper at 33 Argyle Street Parramatta
Build-to-Rent

Green Light for Roxy-Pac’s 60-Storey Parramatta BtR Tower

Leon Della Bosca
3 Min
Burleigh Devine Burly Residences hero
Development

Shovels Hit Dirt for Devine’s $540m Burleigh Tower

Phil Bartsch
2 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/industrial-appetite-hits-10-year-high