Perth industrial & logistics demand on the rise in 2Q22

PERTH, 7 September 2022 – Demand for industrial and logistics commercial property is rising as Western Australia's economy bounces back from the COVID era, according to JLL’s latest research.

Second Quarter figures from global property services group, JLL, show Perth’s industrial and logistics property market recorded 66,600 sqm of take-up in 2Q22, with demand exceeding the two-year quarterly average of 48,300 sqm.

The transport and logistics sectors dominated commercial tenant activity, contributing 25.8% of industrial demand for property over the last 12 months, closely followed by the manufacturing sector with 21.1% of the demand.

JLL’s Head of Industrial & Logistics (WA), Nick Goodridge said the growth in demand for logistics-utilised commercial property came on the back of growth in eCommerce, and a general expansion in WA’s industrial activity.

“Demand remained firmly elevated in the first half of the year, with signs of increased demand into the second half of the year,” said Mr Goodridge.

“The logistics sector continues to drive the majority of the current enquiry, with an ever-growing shift in consumer spending patterns leading to a rise in eCommerce activity and genuine expansion mandates from a range of industry sectors.”

Mr Goodridge said the revival of the state’s manufacturing sector that started in 2021 had gained momentum into the first half of 2022.

“The share of demand from the manufacturing sector has grown from 14.1% in 2021 to 21.1% currently. This has been driven by the resources and construction sectors, creating a need for local manufacturers, such as steel and alumina fabricators, to increase their footprints.”

JLL is forecasting a tightening of commercial property stock in the short- to medium-term, which is resulting in historically low vacancy rates and rapidly rising rents.

“This has resulted in a large number of tenant briefs currently in the market, with our team now managing over 100,000sqm of controlled tenant briefs in the market right now, with occupiers seeking existing and pre-lease facilities ranging from 4,000sqm up to 30,000sqm”, said Mr Goodridge.

Due to significant supply pressures over the last 18 months, occupiers were considering design-and-construct options to meet their requirements.

“In addition to the pre-lease market we are in the initial stages of an emerging speculative construction cycle in WA, which has not traditionally been a strategy by local developers”, he said.

“We see a real advantage in having premium grade product available to lease by the third quarter of 2023 based on current occupier demand and extraordinarily low vacancy rate."