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News release


2014 may be the strongest year of industrial sales volumes on record

With a strong pipeline of industrial investment activity in the final quarter of 2014, volumes could exceed the record high of $4.4 billion in sales in 2007.  Sydney remains the strongest industrial investment market in Australia

​SYDNEY, 19 NOVEMBER 2014 – At the half-way mark of the final quarter for 2014, the strength of industrial investment activity is indicating that 2014 may be the strongest year of industrial sales volumes on record.

Transaction volumes for the first nine months of 2014 have already reached $2.9 billion, edging close to the 2013 volumes of $3.2 billion.  With the current strong pipeline of industrial transaction activity across Australia, JLL is predicting that volumes could in fact exceed the record high of $4.4 billion achieved in 2007.

JLL’s Australian Head of Industrial, Michael Fenton said, “We estimate that there is a pipeline of more than $1.6 billion of potential transactions that will exchange or settle in the last quarter of 2014. That means Australian industrial markets are looking at a record year, with volume not seen this strong in 7 years.  

“Figures for the first nine months show Industrial sales volumes in 2014 increased 40% on the same period in 2013 and have risen steadily each year since 2008. 

“2014 may be the strongest year of industrial sales volume on record, eclipsing the previous highest volume of $4.4 billion in 2007,” said Mr Fenton.

Landmark transactions set to conclude in the fourth quarter include the Super Retail Group portfolio, which was transacted by JLL.

Mr Fenton said, “Sydney remains the strongest investment market for industrial across Australia, making up 47% share of sales in 2014.

“Australian industrial market activity in the third quarter alone was $1.19 billion, which was led by activity in Sydney.

“There has been a clear shift in demand for Sydney and Melbourne assets.  As a result, the share of capital being invested into the likes of Perth and Brisbane is shrinking.”

Mr Fenton said Industrial investments remain highly sought after.

“Demand for Australian industrial investments is very high. Investors are attracted to the high entry yields on offer relative to the other commercial property sectors, the yield spread to the risk-free rate and the income return outperformance of industrial over other non-residential sectors.

“This highlights the depth of buyer demand across the spectrum of quality grades, locations and functions that the industrial sector offers.

“Very strong industrial property investment yield tightening has occurred in the last 18 months, particularly for prime grade assets. The industrial sector is being re-rated as an asset class and investors have aggressively chased core logistics assets with long-dated leases. We expect this will entice some vendors into the market in 2015 to crystalise some gains from this strong pricing cycle.

“As a result, there remains an exceptional spread available between secondary grade assets and prime grade assets in many markets and we expect to see investors exploring this space more in 2015.

“Investors recognising these pricing trends are now increasingly looking for opportunities outside of the core mandates, seeking higher yielding assets with some value-add potential,” said Mr Fenton. 

Share of Sales by Market (by Value)

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