WA’s industrial vacancies lowest in nation

Western Australia’s industrial market is the tightest in the country as vacancy rates drop to 0.2 per cent and rental prices climb by 22.9 per cent, recent research from Colliers International shows.

The real estate group analysed the levels of industrial space above 5,000 square metres available nationally in the second quarter of 2022.

Nationally, industrial vacancies fell to by 1.3 per cent to 1 per cent in the most recent quarter, while WA’s vacancy rates fell to a new low of 0.2 per cent – from 1.7 per cent the previous quarter.

Rents grew at record rates, with a 22.9 per cent increase in rental prices in the past 12 months in WA compared with the national rates of 13.8 per cent.

Colliers director of research Luke Crawford said supply chain volatility and a buoyant local economy resulted in a significant increase in warehouse demand in WA in recent months.

He said supply chain pressures meant occupiers were forced to hold more stock locally.

In the first half of this year, about 150,000sqm of warehouse space above 5,000sqm been leased in Perth so far, driven by the transport and logistics and retail trade sectors.

In contrast, about 190,000 sqm was leased in 2021 and 110,000 sqm in 2020.

Yields for Perth’s industrial sector have remained steady during the second quarter of 2022, at about 4.93 per cent for prime assets, while yields in the eastern states had increased slightly.

“Looking ahead, it is likely that some yield expansion will occur in the Perth market as higher interest rates and funding costs become priced in,” Mr Crawford said.

“However, the pick-up in rents is expected to preserve asset values which are expected to offset increased yields.”

Recent research by CBRE showed Australia’s industrial market was the tightest in the world, with all the major capital cities recording falls in vacancy rates during the first half of 2022.

Taking in warehouse space above 3,000sqm, CBRE found Perth led the pack with a 0.5 per cent vacancy rate.

Colliers said the lack of available space in the prime industrial areas east of Perth including Kewdale and Welshpool had resulted in a renewed demand for fringe industrial precincts including Maddington.

Bunnings, Intertek, Dulux and Yusen Logistics have all developed industrial assets in Maddington in recent years.

Colliers International senior executive for industrial Hayden Dick and Effective Property Solutions head of commercial and industrial Justin Mabarrack are currently running a leasing campaign for a Maddington industrial facility, due for completion next year.

“The development at 146 Maddington Road will cater for operators in sectors such as e-commerce, logistics, transport and mining services,” Mr Dick said.

Lester Group recently bought a $20 million Welshpool industrial site, with plans to develop a 25,000sqm warehouse when the current lease expires.