Eastern seaboard industrial vacancy rate at low levels, according to JLL
JLL’s Director of Industrial Research, Sass J-Baleh discusses the true national industrial vacancy rate
AUSTRALIA- 01 March 2020– Domestic population growth and global demographic changes will contribute to keeping Australia’s industrial vacancy rate relatively low, according to JLL’s Director of Industrial Research, Sass J- Baleh.
Australia has experienced relatively strong occupier demand for the industrial space throughout the past few years. This is particularly evident across the eastern seaboard cities, with the average vacancy rate relatively low at 3.8%.
Ms Baleh said, “Australia’s eastern seaboard vacancy rate of 3.8% is consistent to that recorded in large Asian markets such as Beijing and Tokyo.”
“The relatively lower take up activity levels in the Sydney market largely reflects the lack of floor space availability with the average vacancy rate at 2.6%- the lowest in Australia.”
According to JLL Research, new industrial completions in 2019 (1.1 million sqm) were at the lowest since 2010 (0.95 million sqm). However, development activity will rebound in 2020 with development completions expected to double the 2020 figure.
Most of the 2020 development pipeline is expected to be delivered within the Melbourne market and according to JLL research already 42% of the Melbourne 2020 supply pipeline is already pre-committed to the largest occupiers within the transport, postal and warehousing sector.
“Occupier demand remained strong in Melbourne in 2019, and the first time that the concentration of absorption levels shifted from Sydney to Melbourne,” Ms Baleh said.
Australia’s current vacancy rate average sits relatively low at 5.9%. Ms Baleh continued to say growth in non -discretionary retail goods segment including food, beverages and medical supplies will contribute to most of the long-term demand for industrial and logistics space, with discretionary retail expenditure (i.e. largely encompassing the eCommerce sector) playing a supporting role.
“The production, storage and distribution of consumer staple goods in Australia will grow due to strong domestic population growth, more importantly, through global demand influences particularly within the Asia-Pacific region and the world’s emerging markets,” she said.
“Consumer staples has been a major driver of Australia’s gross domestic product (GDP), representing around 15% of exports, which has a major impact on industrial and logistics demand.”
The leading global economic growth, rapid urbanisation and the growing middle-class population occurring in the Asia -Pacific region is set to play a pivotal and positive role in influencing the demand for Australia’s exports in the medium to long run.
Ms Baleh predicts the eastern seaboard vacancy rate of 3.8% to remain, if not fall, as the supply pipeline begins to taper off post-2020.
“If the Western Australian economy begins to rebound throughout the next year then Perth vacancy levels may also begin to decline, which would in turn see Australia’s average vacancy rate fall below 5.9% by the end of 2020 and early 2021.”
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $18.0 billion, operations in over 80 countries and a global workforce of more than 93,000 as of December 31, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.