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With e-commerce expected to be a major driver of the Australian economy’s revitalisation over the course of 2022, competition for warehouse investment will only grow more fierce, according to one expert.
Mathew Tiller, LJ Hooker’s head of research and business intelligence, attributed some of the sector’s strength to firms safeguarding their businesses by bringing operations back onshore.
“Amidst and post-COVID, we’ve seen transport and logistics operators, construction and pharmaceutical manufacturers and businesses boosting domestic inventory to safeguard against supply chain disruptions,” he said.
With economic factors looking to be swayed by a number of world events, he predicts more companies will follow suit.
“Against the backdrop of global uncertainty, we expect that to continue over the year,” he said.
Mr Tiller foresees that industrial property incentives will tighten across Sydney in 2022 as demand from transport and e-commerce businesses propels the economy’s makeover.
With the city’s central and outer west warehouse incentives currently sitting at around 10 per cent and vacancy rates at roughly 1 per cent, he believes the market could see warehouse incentives in Sydney reaching record, single-figure lows by the middle of the year.
Healthy household spending and infrastructure additions across the state will continue to drive the sector’s strength. With rental growth expected to surge in the second half of the year and anticipated 3 to 5 per cent rental gains across the city in the next 48 months, LJ Hooker predicts the downward path of incentives will level out.
Melbourne’s outlook is somewhat uncertain, with record levels of construction threatened by materials shortages, Mr Tiller said.
Brisbane boasts a wealth of investors looking to get into industrial properties, which is pushing down the yield spread and forecast to tighten yields by 0.3 per cent by mid-2022.
Yields in Perth are also tipped to firm, following the eastern capitals, with the reopening of Western Australia’s borders allowing resources investment to flow back into the region.
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