Six industrial projects to complete in Perth by end-2022 

The projects will add 73,500sqm of fresh stock.

One major development, a new storage facility for DHL with around 3,000 sqm, was completed in Perth in 2Q22. 

According to JLL, there are six projects totalling 73,500 sqm, currently under construction and expected to be completed by the end of 2022. Speculative development accounts for 33.5% of projects currently under construction.

The supply pipeline is limited beyond projects already underway, with only one project with DA approval. New land holdings to the North and South of Perth may lead to an increase in pre-lease, design and construction activity in these precincts.

Here’s more from JLL:

Occupier demand in Perth increased over 2Q22, with 66,600 sqm of gross take-up recorded across 10 major occupier moves (≥3,000 sqm). Anecdotal evidence suggests tenant enquiry levels remain elevated, however a lack of suitable stock is limiting further absorption of tenant demand.

The Perth industrial market recorded 218,500 sqm of gross take-up over the last 12 months, above the 10-year average of 213,600 sqm. Demand was led by the transport, postal & warehousing (25.8%), manufacturing (21.1%) and professional services (11.6%) sectors. Pre-lease activity accounted for just 20.6% of gross take-up in the last year.

Rents increase across all Perth industrial precincts

Average prime existing net rents increased across all three precincts in 2Q22. The South precinct recorded the highest increase in quarterly rents (up 9.3%), while the North and East precincts also recorded increases of 4.4% and 3.9%, respectively. Strong tenant demand coupled with limited industrial supply across all Perth industrial precincts has continued to result in rental growth.

Strong investor demand over the last two years has resulted in significant compression in average yields across all precincts and grades. However, rising cost of debt pressures saw the yield compression cycle come to a halt in 2Q22, with prime yields decompressing by 13 basis points across all three precincts.

Outlook: The sector is expected to continue performing strongly

Despite the increasing cost of debt pressures, the industrial and logistics investment demand remains elevated with considerable capital seeking to be deployed. WA’s strong economic fundamentals as well as insatiable occupier demand is expected to ensure strong performance of the asset class.

The industrial market continues to outperform other commercial property markets. Future demand for industrial space will be supported by the transport, postal and warehousing sector further expanding operations to handle the increased movement of goods, resulting from the rise in e-commerce activity.

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