The Urban Developer
AdvertiseEventsWebinarsUrbanity
Industry Excellence
Urban Leader
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Urban Leader Awards Logos RGB White
NOMINATIONS CLOSE SEPTEMBER 12 RECOGNISING THE INDIVIDUALS BEHIND THE PROJECTS
NOMINATIONS CLOSING SEPTEMBER 12 URBAN LEADER AWARDS
LEARN MOREDETAILS
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
print
Print
OtherStaff WriterThu 03 Mar 16

Industrial Tenant Demand Recovers Across Australia’s East Coast Markets

I

Australia’s industrial occupiers increased their space requirements in 2015 by 18 per cent above the long term average, demonstrating tenant demand is broadly robust, even in markets like Perth where leasing conditions are being impacted by the slowdown in resources.

JLL Research shows all markets other than Adelaide recorded take-up of industrial space above their long term averages in 2015. Sydney was the standout performer, with take-up 42 per cent above average.

Meanwhile, construction activity declined in 2015 to almost 20 per cent below the 10 year average of 1.6 million square metres. New projects in 2015 totalled 1.3 million square metres, with predictions that 2016 will see supply of at least 1.5 million square metres, given the pipeline of projects that have been committed to by occupiers. Notably this year, around 88 per cent of supply under construction is pre-committed, indicating that developers are producing less speculative stock than in previous years.

JLL’s Head of Industrial – Australia, Michael Fenton said: “Sydney led the strong uplift in occupier demand across East Coast markets last year. This indicates that tenant demand is broadly robust and we expect 2016 will be another strong year for take-up of industrial space by occupiers."“We believe this take-up is being driven by a number of factors. With ongoing redevelopment of former industrial space into residential and other uses and tenant displacement from infrastructure projects and other market changes, we foresee the former occupiers of this space will continue to a source of demand in 2016.

“Despite the volatility in global financial and commodity markets, we expect the Australian industrial market to remain robust throughout 2016 as investors seek superior returns from industrial assets and recognise the stability of the broader Australian economy and its industrial growth drivers.

“Australian Industrial transactions totalled $5 billion in 2015, with 35 per cent, or $1.74 billion, of those assets acquired by offshore investors."Nick Crothers, JLL Director of Industrial Research said while market volatility may impact both investor and corporate occupier decision making, these events may actually result in an acceleration of capital flows into the Australian market.

“Australia is seen as one of the few core markets in the Asia Pacific region. We know many groups, particularly sovereign wealth funds, are underweight real estate exposure and underweight the Asia Pacific region. We expect some groups that have raised capital to look to deploy that capital soon in case volatility persists and causes investment managers to sit on their hands for a while,” said Mr Crothers.

2015 Highlights and 2016 Outlook for the Australian Industrial Market:

  • Rental growth in 2015 was led by Sydney. In particular, secondary grade rents in Sydney increased solidly as the stock base is diminishing in the Inner West, South Sydney and North Sydney regions. Rents were fairly steady in Melbourne, but declined in the Southern precinct of Brisbane and in Perth more broadly as rising vacancy and competitive development leasing markets stymie growth.

  • Prime grade yields tightened strongly in 2015 as purchasers bid up the prices of highly sought after assets. Secondary yields also tightened as investors looked for assets with higher return profiles and value-add opportunities. After being elevated for many years, the spread between prime and secondary yields has narrowed sharply and is nearing a more sustainable level in many markets.

  • The Australian industrial market was re-rated in 2015 with landmark transactions, including the sale of GIC and Frasers Property Australia’s Australian logistics portfolio for $1.073 billion. Transaction volumes in 2015 reached $5 billion and more than $1.5 billion worth of major assets were in due diligence or under conditional contract going into the Christmas break.

IndustrialAustraliaReal EstateSector
AUTHOR
Staff Writer
"TheUrbanDeveloper.com is committed to delivering the latest news, reviews, opinions and insights into the best of urban development from Australia and around the world. "
More articles by this author
ADVERTISEMENT
TOP STORIES
Stockland bumps up its apartment pipeline in melbourne and sydney
Exclusive

Stockland Re-Enters Density in $5bn Apartment Play

Renee McKeown
4 Min
Woolloongabba Precinct Vulture St
Exclusive

Brisbane Developer in Cross River Rail Compensation Tussle

Clare Burnett
4 Min
The Mondrian Gold Coast hotel's food and beverage is driving profits
Exclusive

Touch, Taste, Theatre: What’s Driving Mondrian’s Success

Renee McKeown
6 Min
Fortis’ display suites are designed as brand environments first, with tactile details and curated design to build buyer confidence before project specifics.
Exclusive

Relevant or Redundant: Will Tech Kill Display Suites?

Vanessa Croll
7 Min
Exclusive

Missing Heart: Why The Gold Coast Needs a CBD

Phil Bartsch
7 Min
View All >
Aerial view of Caboolture and Bruce highway to Brisbane with Bribie Island Road crossing, Queensland, Australia
Policy

Queensland’s $2bn Push Opens New Housing Front

Vanessa Croll
JQZ Parramatta EDM
Residential

JQZ Plots 10-Storey Addition to Parramatta ‘Auto Alley’ Plans

Clare Burnett
The Adelaide purpose built student accommodation market is about to increase by 1058 beds with the State Commission Assessment Panel supporting two towers in the making.
Student Housing

Highrise Approvals Add 1000-Plus PBSA Beds in Adelaide

Renee McKeown
The two towers, of 35 and 34 storeys, help cement the SA capital’s growing status as the best place in Australia for the…
LATEST
Aerial view of Caboolture and Bruce highway to Brisbane with Bribie Island Road crossing, Queensland, Australia
Policy

Queensland’s $2bn Push Opens New Housing Front

Vanessa Croll
2 Min
JQZ Parramatta EDM
Residential

JQZ Plots 10-Storey Addition to Parramatta ‘Auto Alley’ Plans

Clare Burnett
3 Min
The Adelaide purpose built student accommodation market is about to increase by 1058 beds with the State Commission Assessment Panel supporting two towers in the making.
Student Housing

Highrise Approvals Add 1000-Plus PBSA Beds in Adelaide

Renee McKeown
3 Min
Stockland bumps up its apartment pipeline in melbourne and sydney
Exclusive

Stockland Re-Enters Density in $5bn Apartment Play

Renee McKeown
4 Min
View All >
ADVERTISEMENT
Article originally posted at: https://www.theurbandeveloper.com/articles/industrial-tenant-demand-recovers-across-australias-east-coast-markets