Melbourne industrial vacancy hits five-year low!

Strong demand from logistics, transport, retail and manufacturing companies pushed down industrial vacancy rates across the east coast with the Melbourne market hitting a five year low, according to September quarter data compiled by Knight Frank

Total vacant space for lease fell by 11.5 per cent in Sydney, 8.2 per cent in Melbourne and by 3 per cent in Brisbane over the quarter. The commercial real estate firm said this would likely spur a fresh wave of speculative development in 2019.

In Melbourne, total available space fell to 661,000 square metres while in Sydney total vacancy is now less than 350,000 square metres.

"Vacancy in Melbourne is now at its lowest since 2013 and this, coupled with rising rents and a growing demand for prime buildings, has prompted developers to increase the level of speculative construction," Knight Frank head of industrial in Victoria, Gab Pascuzzi, said.

"Speculative developments currently in the pipeline are concentrated in the west (150,000 sq m) and parts of the south-east, where development sites are more readily available," he said.

In Sydney, limited supply and strong tenant demand from third-party logistics and transport operators were the key contributors for the falls in vacancy.

However, net absorption of 45,000 sq m over the quarter was well below the historical quarterly average of 102,821 sq m leased, partly due to new developments and speculative stock coming to the market.

"The speculative market remains robust with 114,932 square metres across 10 buildings leased over the past 12 months," Knight Frank head of industrial for NSW, Matthew Lee, said.

In Brisbane there was further migration from older-style warehouses to new sheds with leasing activity dominated by the A grade market with vacant stock space falling by 18 per cent to 227,161 sq m. By contrast, available secondary accommodation increased by 18 per cent to 238,921 sq m.

According to Knight Frank, Sydney industrial rents average $119 per sq m (net) while in Melbourne the average is $87 per sq m. In Brisbane the average asking rent is $107 per sqm.

Source:

Posted on Wednesday, 21 November 2018
by Jessica Hammoud in Latest News

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