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Investor demand may be levelling out but occupier demand is strong, particularly in Australia’s two largest industrial markets—but there is a catch.
Occupiers prefer existing space over pre-leasing, according to the latest logistical and industrial research from JLL.
The research found demand for industrial space is on the rebound, resulting in higher rents particularly in the prime market, including a new benchmark being set in western Sydney this month. More on that shortly.
Report author JLL head of strategic research Annabel McFarlane will be the keynote speaker at The Urban Developer’s Industrial Property vSummit on Thursday, September 28.
McFarlane will explore what this means for the industrial sector and where future opportunities lie.
“While a year of interest rate hikes in Australia has decreased consumer purchasing power, slowing occupier demand from retailers and e-commerce users, it has not diminished demand from warehousing and logistics users,” McFarlane said in the report
“With demand still outpacing supply, tenants are still willing to pay higher rents to satisfy spatial requirements.”
Despite the desire for existing industrial space, big pre-leasing deals have been done in Brisbane and Sydney this month.
Port of Brisbane signed the Electrolux Group as the first tenant for Stage 2 of its Port West industrial estate at Lytton, which is due to be completed by October 2024.
The appliance company—one of the few appliance brands to still manufacture in Australia—has taken a 10-year lease over a 4.22ha site, anchored by a purpose-built distribution centre and showroom.
The site included a 21,255sq m warehouse, a ground-floor office and high-end showroom, a first-floor office, dock office, and hardstand-truck apron and carparking.
Meanwhile in Sydney, national logistics and transportation heavyweight Austrans, secured the last speculative warehouse at Bankstown Airport for a new rental benchmark in western Sydney of $280 a square metre net.
The seven-year lease was for Building 4B, 1 Kirby Place, spanning 14,615sq m of premium warehouse and office space that was developed by Altis Property Partners.
JLL head of industrial and logistics brokerage Greg Pike said the lease set a prime industrial rent benchmark in western Sydney.
“In the dynamic landscape of today’s industrial market, this benchmark-setting transaction is a reflection of the on-the-spot demand we’re continuing to witness,” Pike said.
“Rents remain strong for immediate vacancies in the Sydney market—the lease was negotiated and signed within 72 hours.
“Industrial rents are soaring for sustainable warehousing. The demand for cutting-edge, environmentally conscious and strategically positioned industrial spaces is on the rise.”
The Urban Developer Industrial Development vSummit will take place on Thursday, September 28.
