Not to be outdone by the commercial property sector, Perth’s industrial market is attracting record sales and rents across the board.
Not to be outdone by the commercial property sector, Perth’s industrial market is attracting record sales and rents across the board.
Land values in Perth’s major industrial areas have more than doubled in the past 18 months, as the shortage of serviced industrial land takes its toll.
Knight Frank industrial director Martin Reeson said the market was intimately bound to the resources/oil and gas sectors, and he did not see the strong market conditions changing for several years.
Mr Reeson estimated a 30 per cent rise in average industrial rents across Perth during the past 12 months.
“Because the economy is at full stretch, businesses are needing to expand. We’re noticing a greater swing in demand for owner occupied property, rather than for leasehold property over the past 12 months,” Mr Reeson told WA Business News.
Mr Reeson said the investment sales market had slowed due to prime yields tightening to between 6 per cent and 7 per cent, and the fact that many owners were holding on to assets.
Burgess Rawson managing director Andrew McKerracher said soaring land prices were also making it difficult for investors to get into the market.
“It really is the owner-occupiers who are driving the sales of properties in private estates. We are getting a lot of enquires for small lots, particularly at the Tonkin Park industrial estate in Bassendean and at Forrestdale, which are in close proximity to major arterial routes.”
Despite the tightening market, major investment and development players have not been discouraged from acquiring large assets.
In June, John Bond’s Primewest Management paid $57 million for a 38-hectare site in Bibra Lake, one of the largest industrial deals ever brokered in Western Australia. The site is currently home to packaging company Amcor, and Primewest plans to lease back a 14,000sq m factory and small office complex to the tenant before developing the surplus land into a business park next year, comprising bulky goods retail, light industrial and commercial office space.
Mr Reeson said land at Perth Airport, while only available as lease-hold, was attracting significant interest from institutional investors and large development groups, because tenants such as Woolworths, Coles, Toll Group, and SGS wanted to establish major distribution centres there.
Recognising the potential for a Coles distribution centre, Charter Hall paid $155 million in September last year to acquire a 25ha site on Horrie Miller Drive in Perth Airport’s KewLink East estate.
In another record deal, Charter Hall paid $31.8 million in April this year for a 45,000sq m site with office and warehouse facility at 123 Kewdale Road, Kewdale.
Colliers International director of industrial agency, Wayne Chorley, said the airport had become a real focal point for industrial development, with its leasehold status and strict development guidelines serving to increase demand for adjacent sites.
Perth was experiencing a severe shortage of serviced industrial land, he said.
“There is plenty of land in Perth but we’re facing a critical short-term supply problem over the next three to five years. Within every new estate there seems to be something holding it up whether it be roads, environmental approvals or the ‘Bush Forever’ government policy,” Chorley told WA Business News.
As a result of the land crisis, outer areas such as Malaga were attracting $600/sq m for vacant land, which three years ago was on the market for $150/sq m, Mr Chorley said.
Those estates expected to help ease demand in the next 12 to 18 months include: LandCorp’s Neerabup Industrial Estate; Enterprise Park Wangara; East Rockingham Industrial Park; Cockburn Commercial Park; Latitude 32 at Hope Valley/Wattelup; and 34ha private estates in Bibra Lake and Hazelmere.
Mr Chorley said an analysis of the market three years ago found 150,000sq m of vacant industrial space in Perth, but in the current market, Colliers estimated there was a requirement of about 100,000sq m of design and construct space that could not be filled.
