14/04/2011 - 00:00

Industrial market split

14/04/2011 - 00:00

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A TWO-SPEED market has emerged in the industrial land sector, with demand spiking for land located in Perth’s traditional industrial strongholds around Kewdale and Welshpool.

A TWO-SPEED market has emerged in the industrial land sector, with demand spiking for land located in Perth’s traditional industrial strongholds around Kewdale and Welshpool.

But smaller industrial estates on Perth’s periphery are struggling for enquiries, with companies servicing the resources sector and transport and logistics firms seeking well-located lots over 3,000 square metres.

Research from Colliers International indicates industrial transaction levels continued their recovery after a significant decline in 2008, with a 7 per cent increase in 2010 as compared to 2009, but just 107 sales were recorded in the year to December 31.

Herron Todd White Commercial director Matt Tanner told WA Business News a tale of two areas was emerging in the industrial land sector.

“You’ve got your core areas, like Kewdale and Welshpool, which seem to be retaining the demand, and also the values,” Mr Tanner said.

“Then you have your peripheral areas, like Forrestdale, Neerabup and those types of areas, which really are struggling for demand at the moment.

“The demand for small sites really is quite low, particularly when some of the areas, which at the peak of the market became unaffordable, are now a lot more affordable.”

He said engineering, metals fabrication and transport and logistics firms needed well-located land, and simply were not interested in the lots on offer at smaller estates.

This was illustrated by logistics firm Linfox, which announced last week that it would build a $68 million, eight-hectare transport hub at Goodman Group’s Stockyards Industrial Estate in Hazelmere to service its booming Western Australian business.

For the smaller estates, Mr Tanner said the market was categorised by sites totalling less than 3,000sqm.

“It’s your owner-occupiers and investors that are targeting the smaller sites, and that type of market is very slow at the moment,” he said.

“There is just no urgency to make any decisions, particularly when there is a considerable amount of land available at the moment.”

State agency for lands, LandCorp, hopes the arrival of Southern Steel as the first tenant to enter its Flinders Precinct at Latitude 32 will kick-start demand.

Southern Steel has built an 11,000sqm warehouse with 600sqm of office space at Flinders, which LandCorp said had a further three lots under contract, with six remaining from the first stage of lots on the market.

Southern Steel is the largest privately owned steel distributor in Australia.

Meanwhile, in regional WA, demand for industrial land in the Pilbara and Mid West is also increasing.

LandCorp says it has responded to the rising needs of industry in the Pilbara with the development of the Gap Ridge estate in Karratha, where civil works started earlier this week.

Gap Ridge will ultimately become a 268ha, 114-lot estate, which Lands Minister Brendon Grylls said would assist in the expansion of existing industry and help attract new businesses to Karratha.

More than half of the 41 lots in the 60ha first stage of Gap Ridge are already under contract.

Another regional hotspot is the Mid West, where major iron ore resource projects and the planned port and rail infrastructure at Oakajee is stoking demand for industrial land.

Savills WA director of industrial sales James Condon said the Geraldton region was estimated to gain, on average, 4,500 jobs a year from construction work and 10,800 operational jobs.

He said the booming economy in Geraldton would soon translate into demand for industrial property.

 

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