Perth industrial market continues to improve with record low yields: Knight Frank
Perth’s industrial market continues to improve with record low yields and an annual vacancy fall of almost 5%, according to Knight Frank’s latest research report.
The found however that there is still inconsistency across locations, product styles and end-users making some market sectors tough going.
The latest Perth Industrial Market Overview shows vacancy has reduced 4.7% year on year for 2018/19, but while the news is good for suburbs like Canning Vale, Bibra Lake and Wangara, established eastern precincts like Kewdale and Welshpool are no longer enjoying the same success due to their older stock.
Modern developments constructed by private investors in estates like Canning Vale and Bibra Lake are now mostly full and placing upwards pressure on rents for other new facilities brought to the market.
According to Knight Frank Industrial Sales & Leasing Director, Geoff Thomson, other areas showing improvement in rental rates are those with recent infill subdivisions, where the delivery of new lots led to speculatively constructed buildings.
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He said this activity had been seen mainly in core industrial precincts, but was also having a flow on effect across other sections the market.
“The resurgent resource sector in WA is undoubtedly leading the recovery in the industrial property market, but at this stage it is still very resource focussed,” Mr Thomson said.
“The demand for workshops with crane capacity and hardstand continues in the eastern and southern precincts.
“While there has been an increase in both sales and leasing activity over the last 12 months, it is very much focussed on new stock, particularly in the Wangara/Gangara, Bassendean and Canning Vale areas.
“Speculative developments in these areas have predominantly leased in the short term and have outperformed the more established areas who are offering older style facilities.”
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Mr Thomson said investment demand from both local and east coast based investors had driven yields to record lows, but a lack of suitable investment opportunities meant there was relatively little sales activity.
Knight Frank Research Analyst Nicholas Locke said vacancy data as at July 2019 revealed total available space of approximately 622,000 sqm in buildings larger than 2000 square metres. - an impressive quarterly decline of 2.9%.
However he highlighted the volatility in the market that had seen alternating quarterly increases and decreases leading to an overall, but unsteady improvement.
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