Sydney’s industrial market has emerged as the most resilient in the country, with prime warehouse rents having fallen by just 3.2 per cent during the downturn, according to new research from CB Richard Ellis.
CBRE’s latest MarketView report highlights a wide divergence between Sydney and interstate rivals such as Perth, where rents have fallen by as much as 12.9 per cent from the market peak in late 2007.
CBRE director, industrial and logistics services Andrew Maher said the Sydney market had continued to benefit from strong space absorption with the most prominent users coming from the transport and logistics sector.
“While the smaller end of the market has done it tough, larger buildings have continued to lease in good time with incentive levels reverting to a more favorable position for landlords,” Mr Maher said.
“Competition amongst occupants has prevented rents from falling whilst a lack of new stock entering the market has provided us with an undersupply in the market. As a result we would suggest the outlook for rental growth seems positive in the near to medium term.”
CBRE’s MarketView report highlights a 40 per cent drop in industrial construction in the wake of the GFC.
New industrial supply is expected to hit a four-year low in 2009, with developers unable to obtain finance for speculative projects.
While some 1.25 million square metres of potential industrial stock is either on hold or awaiting precommitments, the outlook for new development will be highly dependent on financiers resuming lending for speculative projects and/or a significant pick up in tenant precommitments.