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As NSW prepares to head to the polls on 25 March, the race for leadership has produced a slight decrease across one of the state’s prominent industrial hubs.
Despite state elections generally withholding any “impact on commercial property activity or enquiries, Daniel Krobot, managing director of Raine & Horne Commercial Macarthur, highlighted that the upcoming polling has resulted in some small business owners “delaying decision making until there’s a clearer view of our next government.”
Compounding the pre-election woes for the region, which is widely popular among businesses due to its nearby transport connectivity, is a lack of supply.
“There’s still plenty happening in the industrial market, but we just don’t have enough property to meet our leasing or sales enquiries,” Mr Krobot said.
“Vacancies for industrial are virtually zero, while there’s no land around for sale,” he said, adding different property types offer different vacancy rates, including office space (5 per cent), and retail property (10 per cent).
Retail and office spaces in the region command current yields of 5 per cent, with this figure dropping to 4 per cent across the remaining industrial market.
The supply squeeze has weaved its way into affordability, with Mr Krobot revealing the different leasing conditions across multiple years within the region.
“A few years ago, a 5,000-square-metre warehouse would have been leased for $100 to $110 per square metre. Now, they’re pushing up to $170 to $180 per square metre.”
“This is a significant uplift, with no supply, making it hard for small and medium-sized businesses to secure new properties,” he said.
As a result of this trend, “small businesses are jammed in older premises or must spread their operations across several locations.”
Mr Krobot detailed how one logistics client he’s been working with for two years is hunting for 7,000 to 8,000-square-metre space but has been “trapped in their main 3,000-square-metre shed and are leasing multiple small sheds as overflow, which is inefficient.”
Current market conditions mean more businesses will operate like this unless they “plan 24 months-plus prior to a move to new premises.”
With several projects planned for the city’s south west, Mr Krobot’s estimation is that present market conditions will remain “until we see some of that land around the new Western Sydney airport come online and around the Mamre Road precinct.”
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