Property Australia

Industrial vacancy hits historic low

Karen Jamal Karen Jamal June 15, 2021

The industrial vacancy rate across Australia’s five major cities has fallen to a historic low of 2.24 per cent, says CBRE.

 

  Three key takeaways:

  • The total vacancy rate across Australia’s five major cities is down from 2.95% in the second half of 2020, according to CBRE’s latest Industrial Vacancy Report
  • Data for the first half of 2021 shows Sydney has the lowest vacancy rate in the country, at 1.40%, while Melbourne’s vacancy rate has fallen by a full percentage point to 1.54%
  • Occupier take up of space equates to the size of inner-city suburbs such as Glebe in Sydney or Carlton in Melbourne.

 

Sass J-Baleh, CBRE’s head of industrial and logistics research, says the record low vacancy rate is underpinned by several factors, including the structural shift to online retail and the rise of data centres. Growth of non-discretionary retail and demand for cold storage space are also factors.

“More than 60 per cent of the supply expected to be delivered in 2021 and 2022 has already been pre-committed, and therefore we expect vacancy rates to remain relatively low over the next 18 months,” she says.

The vacancy rates in Brisbane and Perth are 2.90 per cent and 4.30 per cent respectively and – tracked for the first time – the figure in Adelaide stands at 3.20 per cent

Cameron Grier, CBRE’s regional director for industrial and logistics across the Pacific says he has not witnessed “such vast volumes of leasing enquiry” in his two-decade career.

“This has not been restricted to the major east coast markets, either, with South Australia and Western Australia also experiencing record leasing demand.”

In 2020, e-commerce experienced five years of growth in just 12 months, and now accounts for around 13 per cent of all retail sales in Australia.

“There is still a long runway for growth in this area to catch other Asia Pacific countries, where the proportion of online sales typically ranges between 20 and 30 per cent,” Grier adds.

“This, coupled with the fundamental rethink of how occupiers deal with inventory levels, has created considerable momentum in the industrial and logistics sector in 2021.”

The Property Council recently established a National Industrial Roundtable to inform and influence government policy, planning, investment, infrastructure delivery and sustainability. The roundtable is chaired by Frasers Property Industrial’s chief executive officer, Reini Otter.

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