Perth industrial property overcomes tough 2018

The Savills Blog

WA Industrial: Property overcomes tough 2018

Perth’s industrial market has made a comeback in the second half of 2018, following the quietest six-month period in 15 years.  

Savills Perth overcame the struggle, managing to broker several significant deals, including the sales of two major ex-Masters Home Improvement sites, which sold in July to separate buyers for a combined total of $18.1 million.

The two sites at 7 Sobek Pass, Bibra Lake, and 600 Ranford Road, Forrestdale, were snapped up within four weeks of being released to market, with the majority of interest coming from owner-occupiers taking advantage of the low interest rate environment and Perth’s subdued industrial market.  

Two leasing deals to note included CTI Logistics securing a 14,000sq m warehouse at 841 Abernethy Road, Forrestfield, and Mainfreight securing a 6,000sq m facility at 33 Miles Road, Kewdale. 

The year of lease renewals & tightly held investment property

2018 will likely be known as the year of lease renewals, as many tenants renegotiated with their existing landlords for better terms.

From an industrial investment property viewpoint, this remained tightly held by a handful of Perth privates and a few real estate investment trusts.

Yields are tracking at a 0.75 percent discount to the eastern seaboard, while vacancy levels and incentives are circa 10 percent, which is substantially healthier than the office market.

2019 likely to mimic traits of 2018

We expect the challenging leasing market to continue, with a pick-up towards the second half of the year, on the back of resource projects and the mining sector turning the corner.

We have witnessed an influx of supply chain consultants enter the market, as well as an increase in industrial tenant representatives advising corporations on their properties.

Five years ago, very few industrial tenants were represented by an agent, whereas now about 25 percent are represented by an agent, and this figure will continue to increase as corporations see value in having an agent represent them on the tenant lease negotiations.

Savills invested heavily in this space this year, forming a strategic alliance with SA1 Property, which specialises in supply chain analytics.

SA1 Property offers a service to our industrial team that our competitors do not offer.

These analytics enable companies to make smart decisions and drive down costs when considering their relocation costs.

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