Australia’s booming industrial and logistics industry has become a driving force behind the nation’s commercial property market.
The sector has emerged as the surprise performer over the past 12 months, promising growth and rent stability as manufacturing continues its slide, research shows.
In its fourth quarter report for 2016, commercial agency CBRE found higher levels of consumption and investment in the industrial sector strengthened rental opportunity.
CBRE’s MarketView report found that from October to December the industrial and logistics sector grew by 0.5% nationally, underpinned by strong gains in Sydney.
But it was Victoria that shined in a state-by-state comparison, recording its strongest year on record for capital transactions as $1.92 billion in assets changed hands – a 15% jump.
Current activity levels suggest that an increased number of opportunities will be available for investors in the first quarter of 2017, compared to the same period 12 months ago
The report showed $394 million in property transactions during the last three months of 2016 helped propel the Victorian market to its strongest position ever.
A number of high quality assets and portfolio sales in Melbourne helped seal the result.
CBRE’s senior managing director, industrial and logistics (Pacific) Matt Haddon says the latest figures highlight the start of a period of growth.
“The tide has turned,” Haddon says. ”The latest quarterly rental growth and projected growth in 2017 (has) injected confidence into the sector.”
Haddon says gains in consumption and investment spending should now be the focus as the market sector looks set to drive future occupier demand.
The report also showed that reduced supply in 2016 was expected to further stimulate rental growth, with just 433,000sqm released in the December quarter – 34% lower than the same period in 2015.
The report showed $394 million in property transactions during the last three months of 2016 helped propel the Victorian market to its strongest position ever
Nationally, $4.831 billion in industrial and logistics assets changed hands during 2016 – marginally down from a record $5.267 billion in 2015, due to the available stock shortfall.
New South Wales recorded $1.559 billion for the year, followed by Queensland with $537.67 million, $617.2 million in Perth, $146.05 million in South Australia and $31.25 million in the ACT.
“Global capital remains highly focused on this strongly performing segment of the commercial market,” Haddon says.
Current market conditions point to a strong year for the market, he says.
“Current activity levels suggest that an increased number of opportunities will be available for investors in the first quarter of 2017, compared to the same period 12 months ago.”
by Jessica Hammoud in Latest News
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