Skip Ribbon Commands
Skip to main content

News release

PERTH

Perth Industrial market report released for August

Despite the WA economy being in a transitional period, average prime existing net rents remained stable over the second quarter of 2016, and inquiry for prime space and high end facilities remains strong


​A report released this week by JLL's Industrial division shows that despite the WA economy being in a transitional period, average prime existing net rents remained stable over the second quarter of 2016, and inquiry for prime space and high end facilities remains strong.

According to Nick Goodridge, Head of Industrial, the supply of facilities within the market has reached 187,300 sqm over the last 12 months. Three industrial construction projects reached completion over the June quarter, adding 47,600 sqm of new stock to the market.

"If all of the current projects planned proceed as anticipated, 2016 is expected to be the highest year for completions since 2008, and will be over 60,000 sqm above the 10 year annual average. Pre-lease and design and construct projects make up approximately 97% of the supply coming into the market, as occupiers seek to maximise efficiencies in modern, purpose built space," said Mr. Goodridge.

The current supply pipeline includes the new 28,600 sqm state-of-the-art facility in the Forrestdale Business Park for Hitachi Construction Machinery, as well as Bunnings new 30,000 sqm distribution centre in Maddington. Plans are approved for a further 101,200 sqm of industrial space.

"The recent steady number of enquiries is expected to remain into the second half of 2016, with several leasing deals in the pipeline which may add to take-up. The industrial market in Perth may see growth from groups which have held a smaller presence in the market, which are now experiencing a degree of organic growth, given the population growth that Perth has experienced in recent years," said Mr. Goodridge.

There's still high demand for high end leases in prime locations, especially those with premium grade facilities according to the report.

"We have seen an emergence of occupiers seeking engineering and workshop accommodation, which is encouraging, given this sector of the market has been effectively inactive for over 12 months now," said Mr Goodridge.

Investor demand remains high during this quarter, due to the lack of available stock across all value ranges.  There were four industrial transactions recorded in 2Q16, bringing the total sales (≥ AUD 5.0 million) for the 12 months to June 2016 to AUD 724.5 million.

The sale of the Centurion facility, brokered by JLL at 13 Yagine Close, Hazelmere was the largest sale of the quarter at AUD 46.7 million. Birchmead Property Group sold the 22,900 sqm facility to Charter Hall Group, reflecting an equivalent yield of 7.79%.The facility is developed on an 80,000 sqm leasehold parcel of land in the Perth Airport precinct.

The low cost of debt coupled with high yields relative to the risk free rate is expected to support further investment activity over the next 12-24 months and prime yields are anticipated to remain stable for the Perth market throughout the second half of 2016, and into 2017.