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News release

PERTH

Emerging trends in Perth's Northern Corridor​​

JLL’s Industrial division has identified emerging trends in Perth’s northern industrial corridor, which include a shift towards more flexibility from owners of industrial properties


​JLL’s Industrial division has identified emerging trends in Perth’s northern industrial corridor, which include a shift towards more flexibility from owners of industrial properties and a change in the tenant profile seeking property in the area.

JLL Manager, Industrial – WA ,  Brett Mathanda says that clients who are successfully negotiating new leases are more flexible on terms and conditions in the current market than perhaps they may have been in previous property cycles, in order to secure tenants.

“We currently have a property developers that have  recognised the need to be  extremely proactive in their approach to securing tenants, to the point that a few sites have been leased prior to completion,” said Mr. Mathanda.

“Leasing a facility prior to completion in the current market is a difficult task. It requires a tenant to take a ‘leap of faith’ that the developer will have it completed  on time, and it also takes a landlord to negotiate a deal often prior to the general  market being made aware of the property. It takes a very astute landlord who recognises the hurdles within the industrial market and have the confidence to be  proactive in their  approach to securing a tenant,” he added.

“The northern corridor experienced  significant downward pressure on the back of the resources downturn.  Inquiry levels and lease up rates dropped, but we are starting to see signs that this is starting plateauing. Owners who are experiencing succesful results are those who have recognised the change in market conditions and been early to adapt a new strategy.”

According to Mr. Mathanda, there are still a number of owners that might be coming out of a long term lease with a tenant, where the passing rent maybe twenty to thirty percent above market conditions. 

“These owners may struggle to accept the correction in rents and therefore find it difficult to secure tenants. Also, the level of incentive being offered today was almost non-existent five to ten years ago.  Previously tenants may have been given five percent incentive if they were fortunate, now we are seeing deals circa ten to fifteen percent incentive.  This amount of incentive is certainly foreign to the largely local private ownership structure in the northern industrial corridor.”

Mr. Mathanda also notes the increase in the number of inquiries for workshop and engineering facilities.

“For the last 12-18 months we saw an extremely depressed workshop market, however in the last quarter, there was a significant spike in the amount of workshop inquiries.  This resulted in a significant number  of recent JLL leasing deals transpiring to accommodate these occupiers ” said Mr. Mathanda.

There’s also been a level of increase in inquiry overall for properties in the north, but he adds that the increase is probably best defined as a return to some level of normality.