2022-02-25-莱坊-Australian_Industrial_Review_February_2022_17页_9mb

Australian Industrial Review Summary

Core Content

The Australian industrial real estate market experienced significant growth in Q4-2021, driven by the accelerated expansion of e-commerce and supply chain disruptions. These factors have increased demand for warehouse and distribution space, leading to higher occupancy rates, rental growth, and investor confidence. The market is characterized by low vacancy levels, strong tenant activity, and rising land values, with particular emphasis on the eastern seaboard and key cities like Sydney, Melbourne, and Brisbane.

Main Points

• E-commerce Growth: Online retail sales have remained elevated, with a 11.3% share of total retail turnover in December 2021, up from 7.3% pre-pandemic. This has intensified demand for warehouse and distribution space.

• Supply Chain and Onshoring: Supply chain disruptions and the onshoring of manufacturing have led to increased leasing activity, especially in the transport, logistics, and retail sectors. This has resulted in a 12% contraction of existing vacant space on the east coast.

• Occupancy and Rental Growth: Vacancy rates have dropped to record lows, particularly in Sydney (129,061sqm), Brisbane (353,692sqm), and Melbourne (779,522sqm). Rental growth rates have continued to rise, with prime rents increasing by 2.3% in Sydney, 4.6% in Brisbane, and 4.1% in Melbourne.

• Land Value Appreciation: Land values have surged due to limited supply and strong demand. In Sydney, 1-5ha lots increased by 19% Y/Y, while in Melbourne, 1-5ha lots rose by 30% Y/Y. In Brisbane, 1-5ha land values increased by 39% Y/Y, and in Adelaide, small lots saw a 30% Y/Y increase.

• Investment Surge: Industrial real estate investment volumes reached record highs in 2021, exceeding $19.0 billion. This reflects strong investor confidence and the sector's value creation potential, with notable transactions such as the sale of Blackstone's Milestone 45-asset portfolio and Jandakot Airport in Perth.

• Yield Compression: Prime yields have tightened significantly across major cities, with Sydney at 3.75%, Melbourne at 3.50%, and Brisbane at 4.15%. This trend is expected to continue as demand outpaces supply.

• New Development: New development completions are expected to reach record levels in 2022, with over 750,000sqm anticipated for Sydney and over 1.3 million sqm for Melbourne. Much of this development is speculative, and pre-commitments have intensified vacancy pressures.

• Regional Highlights:

  • Sydney: Lease take-up reached 1.2 million sqm in 2021, with prime rents up 6.4% Y/Y. Vacancy in the West declined by 86% Q/Q.
  • Melbourne: Leasing volumes reached 2 million sqm in 2021, with prime rents up 4.1% Y/Y. Secondary vacancy hit a nine-year low.
  • Brisbane: Vacancy dropped 44% in 2021, with land values up 39% Y/Y. Secondary vacant space is at a nine-year low.
  • Adelaide: Prime yields reached a new benchmark, with land values rising 30% Y/Y.
  • Perth: Land values increased by 10.7% Y/Y for small lots, reflecting strong demand and limited supply.

Key Figures

Summary of Trends

• Occupancy and Rents: Vacancy levels are at record lows, with rental growth rates exceeding historical averages. Prime rents have increased by 2.3% in Sydney and 4.1% in Melbourne, while secondary rents have seen growth in Brisbane and Melbourne.

• Land Value Growth: Land values have surged across the country, with the most significant increases in Sydney (1-5ha lots up 19% Y/Y), Melbourne (1-5ha lots up 30% Y/Y), and Brisbane (1-5ha lots up 39% Y/Y).

• Investment Activity: Investment volumes reached a record high in 2021, with several major transactions highlighting the sector's appeal to institutional investors.

• Development and Supply: New development completions are expected to be record high in 2022, with a significant portion being speculative. This is expected to further tighten the market and drive up land and rental values.

• Yield Compression: Yields have compressed significantly, with prime yields tightening by 20bps in Sydney and 25bps in Melbourne. Secondary yields have also seen substantial reductions.

• Regional Focus: Western and South Sydney, South East and West Melbourne, Brisbane South and Trade Coast, and Perth East are expected to see continued growth due to critical land shortages and high demand.

Conclusion

The Australian industrial real estate market is experiencing a strong upswing, driven by e-commerce expansion, supply chain volatility, and onshoring trends. With low vacancy rates, rising rents, and increasing land values, the market is attracting significant investment and development activity. The outlook for 2022 remains positive, with continued demand and limited supply expected to push rental and land values higher, particularly in areas with critical land shortages.