- Australia’s industrial wealth has been very strong in recent years, ahead of other commercial wealth classes.
- The accelerated growth of e-commerce since the outbreak of the pandemic has supported occupant demand, with industrial vacancy rates dropping to record lows across the country.
- The resilience of industrial assets as a result of COVID-19 has driven more investors into this sector and saw record high sales volumes in 2021.
- Industrial property has overtaken offices and has become the asset of choice among offshore buyers.
- Local investors are increasingly competing with offshore buyers, with cross-border capital accounting for 2021’s highest sales ever.
How is the search volume tracked?
Unlike many other commercial asset classes that have faced challenges since the onset of COVID-19, the industrial sector has undoubtedly benefited from a pandemic.
Vacancy rates have been declining for several years, reaching record lows in all states in late 2021, according to CBRE Research. According to CBRE, the national industrial vacancy rate is estimated to be only 1.3%.The second half of 2021 was down from 6.3% in the second half of 2019.
Further demonstrating the strength of the occupier market, the supply of new industrial space in each of the last three years has exceeded historical average levels.
E-commerce is a major driver of occupant demand, and COVID-19 is accelerating the proliferation of online retail.
Looking at how search volumes are tracked on realcommercial.com.au, the difference between buying and leasing searches is widespread. Occupant demand seems to have peaked in March 2021, while buyer demand peaked in October 2021.
2021 sales reached record levels
Beyond 2021, industrial sales were traded in addition to $ 1 million worth $ 28 billion. This is the highest trading volume ever, up 72% from the previous year.
It was the driving force behind the results Buy $ 3.8 Billion in Blackston’s Milestone Logistics Portfolio The sale of $ 1.67 billion by Qube Logistics to the LOGOS Property Group of Moorebank Logistics Park in West Sydney, by Global Investment Group ESR.
Australia’s industrial sector is also receiving increasing interest from offshore buyers. In 2021, Real Capital Analytics estimates that $ 1 million plus 41% of industrial revenue will be destined for offshore buyers, a record high.
Where are investors trying to buy?
In New South Wales, Alexandria has further solidified its position as the most searched suburb of those seeking to buy industrial property, with a higher percentage of searches compared to the last 12 months.
In Victoria, Epping was the most searched place by buyers for the second year in a row, followed by Bayswater, Thomas Town and Dandenon South.
Throughout Australia, the fastest-growing suburbs for buying industrial property in 2021 were O’Connor and Belmont in Western Australia, Norwood and Beverly in South Australia, and Cheltenham in Victoria.
Where are companies considering leasing?
Consistent with the purchase search, Alexandria is the most searched suburb of people seeking to lease industrial property in New South Wales, and demand has increased over the last 12 months.
In Victoria, Port Melbourne was the most searched suburb by those considering renting. Interestingly, Port Melbourne wasn’t in the top 10 suburbs considering buying.
Burleigh Heads on the Gold Coast remained the most searched suburb by those considering renting, but the percentage of searches has declined over the past 12 months.
In Western Australia, rising demand has overtaken Malaga as Osborne Park as the most searched suburb, while in South Australia Adelaide remained at the top.
Floor area requirements
Overall, space requirements marry between those who are trying to buy and those who are trying to lease industrial property. In both cases, medium-sized industrial property rights are the most in demand, with 200-1000 square meters of opportunity accounting for just over 50% of searches.
Industrial real estate less than 100 square meters is the least demanded, accounting for only 6.2% of purchase searches and 7.3% of lease searches.
What do investors want from the industrial property they buy?
Among those considering buying industrial property, “crane” is still the most included keyword, with an 11% increase in instances over the last 12 months. Keywords related to “freezer / refrigerator” continued, with a whopping 87% increase over the previous year.
Due to rising demand for storage space, “storage” has jumped to third place, and if this keyword is included in 2021, it will more than double compared to 2020.
The relative resilience of the industrial sector as a result of COVID-19 is driving more investors to these assets, and the search for “tenant investment” has increased by 48% in the last 12 months. ..
What are you looking for in the office you are renting?
Similar to purchase searches, “crane” is the most included keyword among those seeking to lease industrial property, recording a 37% year-on-year increase.
Tenants are also likely to look for storage space, and the incidence of this keyword has increased by 107% in the last 12 months, showing the strongest growth.
Other keywords that have recorded significant increases in lease searches include “self-supporting” (up 87%), “hardstand” (up 37%), and “workshop” (up 37%). In contrast, searches such as “office” and “grease trap” recorded a significant decrease.