How Perth’s industrial property sector is set to transform in the near term
Several building programs are currently gaining momentum.
Perth's industrial real estate landscape is undergoing a significant transformation as speculative building programs gain momentum in response to a limited existing supply pipeline and record low vacancy rates.
According to Nick Goodridge, Head of Cushman & Wakefield Industrial & Logistics in WA, major developers are stepping up to meet the sustained and pent-up demand for industrial property, as the surge in speculative building programs continues.
“Institutional developers are seizing their opportunity to meet the burgeoning demand for logistics accommodation in WA, and as major speculative projects near completion, the supply side of the equation is starting to look a lot more opportunistic for occupiers:” Mr Goodridge said.
According to Cushman & Wakefield, Perth's geographical land constraints have resulted in limited land availability for new developments in core locations. As a result, developers with land are exploring innovative solutions to maximise the use of their land holdings, and in turn driving the growth of speculative building programs.
“A thriving local economy and remarkably low vacancy rates has led to increased competition among prospective tenants, making it an attractive market for developers to invest in speculative building programs”, Mr Goodridge said.
Leading institutional and major locally based WA developers have recognised the potential of the Perth market and are actively participating in these speculative programs. Hazelmere will see two major facilities coming out of the ground with Hesperia developing a 10,000sqm logistics facility on Stirling Crescent, and Altis Property recently turning dirt on a proposed 15,000sqm facility on Bushmead Road.
Perth Airport will join local groups Realside Ovest and Westbridge Funds in delivering much needed space in the inner core precincts of Kewdale and Welshpool in the delivery of facilities in the order of 10,000sqm, 12,000sqm and 3,200sqm respectively.
Heading south, Centuria will be the first institutional developer to complete a major speculative program, which will consist of a multi-unit facility located on Bannister Road in Canning Vale with a combined GLA of some 12,300sqm. Right behind them, Dexus is targeting a December 2023 practical completion date for two projects at Jandakot Airport, one being the largest ever speculative build at 8 Centurion Place of 26,000sqm and another multi-unit estate at Spartan Road offering smaller facilities in the 3,000 – 4,000sqm range.
According to Mr Goodridge, industrial rents in Perth’s industrial market are forecasted to continue to grow across core product and precincts, however at a more moderated rate compared to the previous two years, with occupiers becoming more sensitive to sharp rental rises.