AFTER a decade of stagnation the industrial property market is experiencing a strong upturn and rental growth is tipped to be on the horizon.
In recent months a number of industrial estates in the northern and eastern corridors, which have been on the market for several years, have sold strongly as owner occupiers and investment groups target the long-overlooked sector.
MLV Real Estate managing director Michael McKenna said that, in the past three months, he had sold 12 blocks in the latest release in Orrong estate, more than double the normal market rate in industrial property.
Prices being achieved in the Welshpool estate range from $140 to $192 a square metre.
Mr McKenna said the industrial property market had been quiet for the past 10 years, however a change in the economy and a burgeoning mining and gas sector were renewing interest in industrial land.
“The next two years are going to be the strongest the industrial market has seen for the past 15 years,” he said.
Colliers International research manager David Cresp said throughout 2002 and 2003 the industrial property market had “looked ugly”. Rents had softened and there was significant vacancy in the Kewdale and Welshpool area.
“Over the past five to 10 years industrial rents have done well to keep up with CPI,” he said.
In recent months the sector has experienced a turn-around and there is now a shortage of larger lots and existing buildings available for lease in the northern corridor.
The State’s burgeoning resource sector and the consolidating trend of large transport companies are considered to be contributing factors behind the resurgence in interest in industrial property.
Mr Cresp said he expected industrial rents, particularly in the northern corridor, to increase over the next two years.
After more than two years of marketing, LandCorp’s Access Park industrial estate in Forrestfield has recently attracted strong market interest.
Following renewed interest in the past eight months, stage one of the estate has almost sold out, and the yet-to-be-released second stage is attracting strong interest.
LandCorp general manager operations Mike Moloney said 21 hectares valued at nearly $15 million had gone under contract to a number of undisclosed purchasers in the past six months.
Mr Moloney said the estate’s location, which straddles Abernethy Road – close to Perth Airport and surrounded by major road and rail routes – had proved attractive to transport and logistics companies.
“It provides easy access for freight coming from intrastate and interstate and is ideally located to serve all areas of Perth,” he said.
“In addition, the investment of purchasers is protected by the high standard of finish of the estate and the quality of the construction that has already been undertaken there, including the Toll IPEC distribution facility, which represents the best in modern freight-handling.”
CB Richard Ellis director of industrial services Matthew Lyford said the industrial market had become much more active in the past six to nine months.
“Inquiry levels are up across the board – small lots, large lots, the investment market,” he said.
Sale prices of $62 to $70sq m were currently being achieved at Access Park, he said, whereas this time last year marketing agents were trying to work out how to get buyers to even look at the land.
Mr Lyford told WA Business News that Access Park buyers comprised a mix of owner-occupiers and developers, who had recognised the increasing demand.
Colliers International commercial/industrial sales and leasing consultant Terry Menage said there was significant leasing inquiry for buildings 1500sq m upwards, however many tenants were missing out on leases due to the shortage of larger buildings and were looking to design construct scenarios.
Mr Menage said the market was just beginning to experience rent increases and, off the back off this, there was renewed investor interest.
“Over the next two to three years we will see tangible increases in rents in the north,” he said.
“Over the next two to three years we will see tangible increases in rents in the north.”
- Terry Menage
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