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News release


Australian Industrial Market set to grow from $29 billion in 2012 to $53 billion of capital stock by value in 2022

Brisbane and Perth becoming larger investment destinations, accounting for 29.7% of capital stock by value in 2012, estimated to increase to 36.2% in 2022

AUSTRALIA, 26 JUNE 2013 – Jones Lang LaSalle has undertaken an exercise to calculate the investable universe of the Australian Industrial market over the past decade.  The market value of the prime and secondary grade industrial stock in the 5 capital city markets was $29.1 billion as at 2012.

The analysis by Jones Lang LaSalle highlights that the resource-rich markets of Brisbane and Perth are becoming larger and more attractive investment and development destinations.

Australian Head of Industrial at Jones Lang LaSalle, Michael Fenton said, “Our estimates are that the growth of the Australian Industrial market will continue and surpass $50 billion in another ten years.

“Investors that have traditionally had an east coast focus are increasingly taking note of the scale and depth of the Brisbane and Perth markets and are looking to acquire product in these states to re-weight their portfolios,” said Mr Fenton.

The report shows Sydney and Melbourne are the largest markets by value.  However the strongest relative growth value of stock has occurred in Brisbane and Perth in the last decade. This trend is forecast to continue, driven by stronger population and employment growth and the development of new industrial stock to service this growth.  As a result, Brisbane could overtake Melbourne as the second largest market by value of capital stock in the next decade.

“Over the next decade, Sydney is expected to retain its place as the largest market by both physical stock and capital value of stock.  Therefore investors will likely continue to have a high weighting to Sydney.

“However, to diversify in line with the relative growth in other markets, investors would need to down weight during the next decade – either through asset sales in Sydney or asset purchases in growth markets of Brisbane and Perth.

“Investors looking to have a nationally diversified portfolio, but without a presence in the Perth market, may find it increasingly difficult to justify given the relative share of capital stock estimated in the next decade,” said Mr Fenton.

Director of National Industrial Research, Nick Crothers said Jones Lang LaSalle expects a close relationship between the future growth of the industrial market and Brisbane and Perth’s share of national population.

“Stronger growth in population in Brisbane and Perth forecast over the next decade, driving housing investment and consumption, is expected to be a catalyst for stronger relative industrial construction growth compared to today’s stock base.

“Because of this, on a relative basis, Perth and Brisbane’s physical industrial stock bases would grow at more than twice the rate of Sydney, Melbourne or Adelaide in the next 10 years,” said Mr Crothers.

He said some of the trends evident in the data from the last 10 years will provide an indication of potential trends in the next 10 years.

“An additional 15.4 million square metres of physical stock (above 5,000 sqm) was developed across the five capital city markets in the past ten years.

“While the majority of this new stock was located in Sydney and Melbourne (68%), the relative growth of Brisbane far exceeded all other markets, followed by Perth and then Adelaide.

“Average capital values in Brisbane increased by 7% per annum over the past decade, resulting in significant relative value growth in the Brisbane stock base.  Perth also saw 7% per annum value growth, while Adelaide increased a solid 6% per annum.  In comparison, value growth in Sydney and Melbourne was more conservative, at 3% per annum,” said Mr Crothers.