The industrial sector is powering through restrictions, with vacancies remaining tight, and minimal disruption to rent in the first six months of 2020.
Sydney recorded the tightest vacancy at 1.8 per cent ahead of Brisbane at 2.7 per cent and Melbourne 3 per cent according to the CBRE industrial and logistics report.
The biannual report on facilities greater than 4,000sq m in size reveals that tight vacancy underpinned performance in the sector as the pandemic pushed consumers towards e-commerce.
Sydney’s outer north west and central west were the main drivers of the state’s low vacancy levels, and the slight dampening in demand due to Covid had minimal impact on rents and incentives.
Melbourne’s vacancy remained tight as speculative development was placed on hold and unoccupied space was predominantly made up of short-term sublease space from third party logistics companies.
The CBRE report also shows supply is decreasing in Brisbane, and there is likely to be an undersupply of A-grade stock in coming quarters.
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| Location | Vacancy Rate | Best Performer | Worst Performer |
|---|---|---|---|
| Sydney | 1.8% | Outer North West 1.2% | Central West 3.4% |
| Brisbane | 2.7% | North 0.7% | West 3.6% |
| Melbourne | 3.0% | South East 2.3% | North 4.3% |
| Perth | 2.9% | North 1.1% | East 7.7% |
^ Source: CBRE Industrial and Logistics Vacancy Report H2 2020
While the world’s economies have felt the impact of the global pandemic, the industrial sector is gaining strength, according to CBRE report authors Kate Bailey and Aiden Bresolin.
“E-commerce, combined with the need for purchases to be made online have contributed to occupiers expanding their business capacity.
“Along with changing consumer behaviours to meet the requirements of local lockdown restrictions, it is likely that distribution will continue to increase as this behaviour continues beyond the pandemic period.”
The industrial and logistics sector vacancy rate compares to 9.2 per cent for the office sector in the six months to July, and mixed results in retail which has been battered by changes in lockdowns and foot traffic.
This has led a number of major real estate investment trusts to turn to the sector to “strengthen” portfolios as uncertainty surrounding the pandemic continues.
