Perth’s industrial sales agents are being forced to ride out a land supply shortage across the metropolitan area as several factors combine to put further pressure on already diminishing stocks of three- and four hectare lots.
Perth’s industrial sales agents are being forced to ride out a land supply shortage across the metropolitan area as several factors combine to put further pressure on already diminishing stocks of three- and four hectare lots.
About 1,200 hectares of industrial land, separated into 13 precincts, will be released in stages at LandCorp’s Hope Valley-Wattelup Redevelopment Project next year, as well as an additional 1,000ha in its Neerabup Industrial Estate.
Jones Lang LaSalle director of industrial agency Richard Parry told WA Business News the supply of larger industrial lots in Perth was mainly controlled by LandCorp and the Westralia Airports Corporation, which is currently developing a 700ha industrial estate.
“It’s difficult for a multi-operational company to get a large chunk of land, other than at the airport,” Mr Parry said
“This is because the government is effectively subdividing lots into smaller blocks to get a greater return per square metre.”
The airport has an integrated plan to enable the supply of long-term leasehold land to large industry within its industrial precinct and has already attracted tenants such as Coles Myer, Woolworths, Australia Post and Cummins Diesel.
In Savills’ latest industrial report, the agency indicated a majority of industrial property was currently being sold to small owner-occupiers and private investors in the $1 million to $3 million price range.
In the year to March 2006, almost $99 million worth of property in this price range was sold, representing a 25 per cent increase over the previous period.
Savills associate director of research, Belinda Nowland, said developers comprised 20 per cent of the total value of industrial property bought.
Almost $68 million worth of industrial land sales were transacted in the year to March, with smaller private investors and owner-occupiers being the dominant players.
Mr Parry noted that the owner-occupiers coming into the market were traditionally tenants who were now channelling their superannuation into land and developing for themselves.
Burgess Rawson director Chad Henville said people were well financed, mainly off the back of the resource sector, and wanted to buy property now.
Land supply had met demand in the past, however he had noted a sharp increase in demand for smaller lots recently, fuelling more subdivisions.
“All demand has come in at the same time, to the benefit of the leasing market, which has been in the doldrums for a long time,” Mr Henville told WA Business News.
He said property owners in Osborne Park and Balcatta were now pushing out industrial operations in favour of promoting commercial and showroom properties, which were attracting higher rentals because of their high visibility and close proximity to Perth.
In this regard, Malaga was also becoming less affordable, forcing industrial businesses to consider less traditional options such as Bayswater.
“Bayswater will be the next area to really lift. It’s been underperforming for a long time but is experiencing regeneration with a number of new developments springing up and existing businesses undergoing a cleanup,” Mr Henville said.
Mr Parry said he also expected growth in Bayswater, as the area was within 10 kilometres of Perth and had good road and rail transport links.
With more industrial land coming online in Perth within the next three years, he suggested LandCorp should change its charter so that land releases for all sized operations were available, and not just for smaller businesses.
