Perth gross industrial take-up reaches 200,800sqm in 2023 | Real Estate Asia
, Australia

Perth gross industrial take-up reaches 200,800sqm in 2023

This is slightly below the 10-year average.

In a report, JLL said occupier demand in the Perth industrial market slowed over Q4 2023, with 47,800 sqm of gross take-up recorded across five major occupier moves (≥3,000 sqm). Activity recorded in the quarter was below the two-year quarterly average of 66,200 sqm.

“The Perth industrial market recorded 200,800 sqm of gross take-up over the last 12 months, marginally below the 10-year average of 205,000 sqm. Demand was led by the Transport, Postal & Warehousing (36.0%), Retail Trade (16.0%) and Manufacturing (13.4%) sectors,” the report added.

Here’s more from JLL:

Two major developments (≥3,000 sqm) reached completion in Q4 2023, totalling 32,300 sqm. There are 13 projects totalling 135,796 sqm currently under construction, expected to be completed by Q3 2024. Six of these assets (62,200 sqm) have yet to receive any level of pre-commitment.

The potential future supply pipeline has seen a significant uplift, with 11 projects in the plans-approved or plans-submitted stages totalling 109,900 sqm.

Rents stable across all Perth industrial precincts

Average prime existing net rents were unchanged across all three precincts in Q4 2023; the fourth consecutive quarter that rents were stable. Nevertheless, annual rental growth has been positive across all precincts. Rents in the South precinct were up 4.1% y-o-y, while the North and East precincts recorded increases of 4.0% and 3.7%, respectively.

Elevated cost of debt has continued to slow investor demand, leading to further yield decompression for industrial and logistics assets. Prime yields decompressed by 25 basis points across all three precincts in Q4 2023 to a mid-point of 6.25%. 

Outlook: Rental growth is expected to slow moving forward

Assuming occupier demand remains elevated, it is anticipated that rental growth will continue to remain positive. Nevertheless, the rate at which rents will increase is expected to slow due to the entry of new speculative supply into the market.

Broader state economic conditions remain positive, largely attributed to the ongoing strength of the resources sector. Consequently, warehouse demand from the mining and manufacturing sectors should persist and continue to support occupier activity.

Note: Perth Logistics & Industrial refers to Perth's industrial market (all grades).


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