Occupier take-up in Australia’s industrial and logistics sector is on record-setting pace with retailers leading the charge for space on the back of increased e-commerce spending.
Leasing deals totalling more than 3 million square metres—just shy of last year’s full-year record take-up—have already been notched up this year.
Up almost 900,000sq m on the same period last year, the national take-up tally is on target to close out 2021 with a new benchmark.
CBRE’s latest Australia Industrial Figures Report shows tenants signed leases for 3,124,593sq m in facilities across Sydney, Melbourne, Brisbane, Adelaide and Perth in the first three quarters of the year.
Take-up at the end of the third quarter last year stood at 2,248,364sq m and surged to finish 2020 with a record 3,302,686sq m—the first time the full-year tally had surpassed 3 million square metres.
The previous record was 2,785,272sq m set in 2019.
CBRE’s head of industrial and logistics research Sass J-Baleh said the retail sector had led the way on take-up nationally in the third quarter, accounting for 35 per cent of leasing transactions
Ms J-Baleh said the demand for space from retailers was in line with the growth of e-commerce spending, which has been boosted by lockdowns and reached $51 billion in Australia during the past 12 months.
“Lockdowns continue to accelerate the major growth trends for industrial and logistics, as more consumers take their non-discretionary and discretionary shopping online,” she said.
“As a result, we’ve seen more e-commerce, and associated transport and logistics activity in Melbourne than anywhere else in the country.”
J-Belah said Melbourne—where Myer was among the retail occupiers signing up for space last quarter— had accounted for just over 50 per cent of the national take-up so far in 2021 with its 1,617,719sq m of transactions, followed by Sydney with 928,487sq m (30 per cent).
The Victorian capital is already well-clear of its full-year record of 1,254,228sq m set in 2019.
“Cheaper average rents also make Melbourne appealing for occupiers, especially compared to outer western Sydney precincts where prime average rents are 23 per cent higher,” J-Belah said.
The booming e-commerce sector, improvements in automation and demand for last-mile logistics have led to huge demand for industrial space in recent years.
Global supply chain disruptions last year, especially in retail, have resulted in rising inventory requirements and greater demand for space. These trends, along with strong leasing demand, are continuing to drive growth in the sector.