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News release


South Sydney’s ‘New Industrial’ caters for rapidly growing residential population

‘New Industrial’ occupiers drive change in market pricing dynamics

​​​SYDNEY, 29 NOVEMBER, 2014 – The South Sydney industrial market is undergoing significant transformation. Many manufacturing businesses are moving west to take advantage of road and infrastructure projects and lower rents, while “New Industrial” occupiers are increasingly competing with traditional industrial users for industrial space. 

According to JLL’s latest Research report, titled “The Rise of ‘New Industrial’ in South Sydney​”, greater high-density development and ongoing gentrification are underpinning the evolution of South Sydney from a blue-collar, industrial working class area to an upmarket, mixed-use precinct with a rapidly growing local residential population. 

As a result of this transformation, companies not typically known as industrial users – the ‘New Industrial’ – are taking up traditional industrial space in order to service the local residential population. This is driving change in market pricing dynamics within the South Sydney industrial market.

JLL’s Associate Director of Industrial for South Sydney, Keegan Ridings, said there are significant rent and value differences between these ‘New Industrial’ occupiers – which include hospitality, showroom, creative office and recreational firms – and traditional industrial businesses.

“The push into South Sydney by ‘New Industrial’ occupiers is creating significant uplift in industrial rents and values through the diminishing industrial stock base, and through greater competition in the occupier market.

“Once associated with logistics and manufacturing, South Sydney is becoming increasingly recognised as a residential growth hub. ‘New Industrial’ occupiers are increasingly competing with traditional industrial occupiers for space. These factors have far-reaching implications for the South Sydney industrial market, including changes in market pricing dynamics.”

According to the Report, the alternative uses employed by new industrial occupiers generally command a higher rate per square metre. On a typical lease over a Gross Lettable Area (GLA) of around 5,000 square metres, traditional industrial occupiers in South Sydney would expect to pay between $130 and $160 per square metre. 

This is well below the achievable rents for ‘New Industrial’ occupiers – for example, firms in the hospitality sector will pay an average of between $300 and $400 per square metre while showroom users or bulky goods retailers will pay between $200 and $300 per square metre, according to the Report.

Mr Ridings said, “Given the rapidly expanding local resident population, the need for the services provided by ‘New Industrial’ occupiers is mounting. A greater number of food establishments, childcare centres, recreational facilities, and professional and domestic services firms are required to service the growing population.”

However, key traditional industrial occupiers are set to remain. 

“While many of the traditional occupiers are moving west to take advantage of the NSW Government’s Western Sydney Infrastructure Plan including the airport at Badgerys Creek, key industries such as the transport and logistics sector are likely to remain in South Sydney.

“The precinct’s close proximity to the CBD, Sydney Airport, Port Botany and important road corridors underline the ongoing strategic importance of South Sydney as an industrial hub,” concluded Mr Ridings.