More than 1.18 million sqm of logistics and industrial floorspace was leased in the second quarter of 2021 – the highest quarterly take-up figure on record, new JLL research shows.
Melbourne accounted for the highest proportion of leasing activity for the fourth consecutive quarter with gross take-up totalling 445,700 sqm – equivalent to 38 per cent of the national total and more than double Melbourne’s long-term average.
“Despite the increasingly tight availability of existing space, we are still seeing significant deal flow across the market,” says Matt Ellis, JLL’s head of industrial in Victoria.
Upwards of 300,000 sqm of new developments commenced in Melbourne over the last three months, Ellis adds, and JLL expects this stock will be gradually absorbed as it is constructed, “with relatively little to be available to tenants at completion”.
Activity in the Sydney market was also higher than historic benchmarks, with the 443,400 sqm of gross take-up equivalent to 37 per cent of the national total. This was more than double Sydney’s long-term average.
Third party logistics providers have driven the occupier market in 2021, says JLL’s head of industrial in NSW, Peter Blade. These groups are expanding rapidly to meet the demands of their growing client base. Lease renewals are often negotiated to expand existing footprints, Blade says.
Annabel McFarlane, JLL’s senior director of industrial research, says the June quarter posted the highest volume of new development commencements on record.
JLL tracked more than 800,000 sqm across 33 new logistics and industrial projects starting construction over the last three months. “These projects have seen healthy levels of occupier interest and secured a pre-commitment rate above 50 per cent,” McFarlane says.
“While the development pipeline is significantly de-risked, a number of developers are willing to undertake speculative development to have product available to capture upcoming occupier demand at higher rental levels,” McFarlane adds.