Melbourne is driving the national industrial leasing market with more than one million square metres leased in the 12 months to September,
3 million sq m leased nationally in 12 months to September
Melbourne is driving the national industrial leasing market with more than one million square metres leased in the 12 months to September, a rise of nearly 50 percent on the five year average, according to Savills latest research.
The research also reconfirmed Melbourne and Sydney as the dominant industrial markets accounting for 1.78 million square metres or 70 percent of the national leasing total.
Wholesalers and transport & logistics tenants were the most active with 72 percent of the market in Melbourne (wholesale - 431,670sq m) and 64 percent of the Sydney market (Transport & Logistics 289,672sq m).
According to Savills National Head of Research, Tony Crabb, more than 3 million square metres of industrial space was leased over the period across the Adelaide, Brisbane, Melbourne, Perth and Sydney markets, slightly below the five year average.
“The markets are unequivocally illustrating the variance in economic fortunes the mainland states have experienced since the end of the mining investment boom.
“Victoria’s population growth is above the national average and New South Wales is not far behind, while growing confidence in economic performance, including large infrastructure projects and concomitant jobs growth in both states, has resulted in a healthy rise in industrial leasing, and in particular has driven demand for large and modern industrial buildings.
“Perth remains in the doldrums, however there are a number of active requirements in the market which may lead to an increase in this activity in the medium term, while Brisbane is tracking nicely above the long term average and Adelaide just below,” Mr Crabb said.
View the square metres reported for each state and a yearly comparison.
Savills National Head of Industrial, Darren Curry, said the figures underscored the stability of the industrial market nationally with leasing at less than 1 percent below the five year average, however the data for Sydney was a less than an accurate representation of the market with a groundswell of pre-leases including several 40,000 plus requirements from major occupiers due to be announced.
“The next quarter will see those Sydney numbers turn right around and a key driver will be the requirements of 3PL (third party logistics) occupiers on the back of contract expiries.
“Sydney will be coming home with a wet sail and that augurs well for 2017 in no uncertain terms,” Mr Curry said.
The research found pre-commitments in Sydney were at 253,492 square metre, just above the five year average of 245,204 square metres.
In Melbourne, Victorian Head of Industrial, David Norman, said pre-commitments were also driving the Victorian market with 327,888 square metres, nearly a third of all leasing activity, in the 12 months to September.
He said retailers with online presence, corporates looking for efficiencies through consolidation, third party logistics, housing construction and food retailing, all supported by a rising population, would all contribute to a continuation of strong leasing growth in the short to medium term.
Mr Curry said rents remained static nationally due largely to the intense competition between developers, however increases in land values in some markets, in particular Sydney’s west where a rise of up to 25 percent has recently occurred, would drive rental growth.
He said the general industrial market outlook for the next 12 months would be steady as she goes, with Sydney and Melbourne continuing to outperform the other states.
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