Industrial growth sectors expected to drive occupier demand in Adelaide

New JLL paper highlights Tradition and Technology, Wine and Agribusiness, Defence and Advanced Manufacturing and Logistics as key growth areas.

May 14, 2018

AUSTRALIA, 2 May 2018 – A new paper from JLL, Tradition and Technology, has found that there are four sectors that are expected to drive occupier demand in the South Australian industrial market over the short (next 12 months) and medium term (next 3-5 years).  

JLL's SA Managing Director Jamie Guerra said "We've identified Wine & Agribusiness, Defence, Advanced Manufacturing and Logistics as the four sectors set to drive occupier demand in the Adelaide Industrial market.

"We saw a positive shift in industrial occupier sentiment in 2017, and recorded a notable increase in enquiry from tenants with larger space requirements – ultimately translating to improved gross take-up levels. The ongoing North-South road corridor infrastructure project will only improve industrial occupier demand levels in the future as it unlocks and improves freight routes and accessibility throughout Adelaide over the next few years."

This increase in industrial occupier demand can be attributed to four sectors that we have identified as the future drivers of the SA industrial sector.

Four key growth areas for Adelaide:

Wine & Agribusiness: 

  • South Australia accounts for 51% of Australia's annual wine production[1], and 61% of national wine exports, with the value of SA wine exports reaching AUD 1.57 billion in 2017, the strongest annual result in 10 years[2].
  • The agribusiness sector in South Australia has benefited from a rise in offshore demand and recorded increased export levels. This positive business sentiment in the agribusiness sector translated into physical occupier demand in the Adelaide industrial market in the second half of 2017.

Defence:

  • As a result of the certainty of future industry in South Australia, many established defence-oriented firms have already commenced expansion programs to future-proof business operations and workload capabilities.
  • Increased occupier demand from defence-oriented businesses has also lifted the demand on certain industrial land markets, which we've seen through land acquisitions and major tenant commitments by Haulmark Trailers (4,500 sqm) and VeroGuard Systems (7,500 sqm) in 2017.

Advanced Manufacturing:

  • Advances in bio-medicine, renewable energy and robotics have increased demand from advanced manufacturers for modern facilities with bespoke R&D capabilities.
  • The renewable energy sector in particular will be a future driver of industrial take-up, with South Australia at the forefront of the Australian clean energy policy, attracting global operators including Tesla to the state.

Logistics:

  • Transport, postal and warehousing occupiers accounted for the largest proportion (36%) of the Adelaide industrial market total gross take-up recorded in 2017. It is expected that the continued strength of retail trade, the ongoing demand for SA exports and the increased defence sector investment will support the Adelaide industrial market activity over the medium to long term.

JLL's Strategic Research Manager – SA, Rick Warner said, "Adelaide's industrial occupier demand recovered in 2017 after a period of transition, with the strongest annual gross take-up figure recorded since 2013.

"Industry clustering has already begun in South Australia with a collection of businesses within the defence, renewable energy and advanced manufacturing sectors committing to new facilities in the state.

"The future growth of these industries, along with the ongoing growth of the domestic and export wine industry, will likely be the future drivers of Adelaide's industrial demand, supply and resulting investment opportunities in the future."

The full research paper, Tradition and Technology, can be found here.

[1] Wine Australia – Australian Wine Sector 2017 Report

[2] Wine Australia – National Export Report 2017

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specialises in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2017, JLL had revenue of $7.9 billion; managed 4.6 billion square feet, or 423 million square meters; and completed investment sales, acquisitions and finance transactions of approximately $170 billion. At the end of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of 82,000. As of December 31, 2017, LaSalle had $58.1 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com

JLL has over 50 years of experience in Asia Pacific, with over 37,000 employees operating in 96 offices in 16 countries across the region. We were the first global commercial property firm to establish an Australian presence in 1958 and currently employ over 3000 employees throughout our 18 offices across the country. The firm won 23 awards at the International Property Awards Asia Pacific in 2017 and was named number one real estate investment advisory firm in Asia Pacific for the seventh consecutive year by Real Capital Analytics. www.ap.jll.com