Seven new industrial projects expected to be completed in Perth by Q4

The projects will add over 80,400sqm to the city’s stock.

No major industrial developments (≥3,000 sqm) reached completion in Perth in 1Q23. Nevertheless, JLL said in a report that the last 12 months has seen 78,800 sqm of new supply added across six projects. There are seven projects totalling 80,400 sqm currently under construction and expected to be completed by 4Q23.

“The potential future supply pipeline has seen an uplift, with eight projects in the plans-approved or plans-submitted stages totalling 92,500 sqm,” the report added.

Here’s more from JLL:

Occupier demand in the Perth market decreased over 1Q23, with 21,300 sqm of gross take-up recorded across three major occupier moves (≥3,000 sqm). Quarterly gross take-up declined for the second consecutive period.

The Perth industrial market recorded 238,500 sqm of gross take-up over the last 12 months, above the 10-year average of 207,100 sqm. Demand was led by the Transport, Postal & Warehousing (29.3%), Manufacturing (19.2%) and Wholesale Trade (12.6%) sectors. Pre-lease activity accounted for 34.4% of gross take-up in the previous year.

Rents increase across all Perth industrial precincts

Average prime existing net rents increased across all three precincts in 1Q23, marking the fourth consecutive quarterly increase in rents. Rents in the South precinct increased by 4.1% over the quarter, while the North and East precincts also recorded increases of 4.0% and 3.7% respectively. Annually, rental growth was the strongest on record across all three precincts.

Rising cost of debt pressures has continued to slow investor demand, leading to yield decompression for industrial and logistics assets. Prime yields decompressed by 25 basis points across all three precincts in 1Q23 to a mid-point of 5.50%.

Outlook: Rental growth is expected to maintain upward momentum

Rental growth is expected to remain positive in the medium term, driven by strong demand and scarcity in supply. Nevertheless, with global economic conditions set to deteriorate in 2023, growth expectations are set to be softer.

Occupier demand is anticipated to remain elevated as long as broader economic conditions remain positive. The e-commerce sector is expected to continue to lead sectoral demand, driven by strong ongoing consumer spending tailwinds.

Note: Perth Logistics & Industrial refers to Perth's industrial market (all grades).