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News release

Sydney

Sydney’s Industrial tenant demand shows some improvement: Jones Lang LaSalle’s latest Asia Pacific Property Digest


SYDNEY, 29 August 2013 – Jones Lang LaSalle has released its Asia Pacific Property Digest (APPD) for Q2 2013, providing the latest quarterly data and analysis for over 20 key cities across Asia Pacific.

According to the findings for Sydney’s Industrial sector, tenant demand has improved during the second quarter, with 179,100 sqm of gross take up recorded over 15 occupier moves. This compares to 100,200 sqm over 11 occupier moves in Q1 2013. Investment in the market has been active, with eight sales totalling AUD 174.8 million during Q2 2013.

Jones Lang LaSalle’s NSW Managing Director and Head of Industrial Michael Fenton noted that the APPD figures for Sydney’s Industrial sector showed that after the first quarter of 2013, tenant demand improved moderately.

Pre-lease and design and construct activity picked up, with seven moves recorded in the quarter totalling 84,700 sqm – albeit with a shrinking size cohort. Gross take-up into existing stock totalled 91,700 sqm in the second quarter, with the largest of these occurring in the Outer South West and the Inner West submarkets.

Mr Fenton said that, while this uptick in pre-lease activity is a positive sign for developers, anecdotally developers are offering larger incentives to tenants due to competition in the pre-lease market.

Moving forward, Mr Fenton said tenant demand in Sydney’s Industrial sector is expected to be subdued over the short term. “Exporters are likely to recalibrate business operations to the new lower AUD, and both online and bricks-and-mortar retailers will also need to adapt.

“Net face rents are expected to remain flat, but further incentive increases are likely. Yields are expected to tighten further across both the Prime and Secondary grades, as both foreign and domestic investors seek well-tenanted, investment-grade assets,” said Mr Fenton.

Regionally, the findings of the APPD showed that during the second quarter of this year, the region’s property markets continued to record a mixed performance due to a sharp divergence between leasing and investment activity.

In addition to the sector overviews from the first half of the year, the latest APPD includes accompanying podcasts from across the region including:
• An overview of the Asia Pacific economy and property market in the first half of 2013 from Dr Jane Murray, Head of Research Asia Pacific.
• Strong investment activity in the Australian commercial real estate market – Dr David Rees, Head of Research, Australasia.