In Brief: Rental growth in industrial sector

A SUPPLY and demand imbalance in Perth’s industrial property market has ensured rental growth continued in the March quarter, although future land releases are expected to relieve pressure, according to data from Jones Lang LaSalle. About 307,300 square metres of industrial land is currently being prepared for use in Perth and should be available this year. This is slightly less than the 401,700sqm being developed in Brisbane and significantly below both Sydney (829,000sqm) and Melbourne (596,100sqm). Perth was one of the few areas cited in the report, along with Melbourne’s south-east and fringe markets, where rental growth was strong. Perth North, in particular, experienced higher rental growth (21.9 per cent) than most other markets over the past year, although new supply is tipped to limit growth going forward. Nationally, 2008 is expected to be a record year for industrial land supply, although sharemarket turmoil has reduced the pool of potential buyers for industrial assets. JLL national director of industrial investments, John Macree, said the sector was going through a period of re-pricing of assets. “In the current market, many institutions will need an initial yield of [9 per cent and above] for an acquisition to be accretive to their fund,” he said.

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