South Australia’s key growth sectors continues to create upside for the state

ADELAIDE- 14 June 2022 – The expansion of the defence, health and technology sectors in South Australia is expected to continue to generate positive implications for the state’s commercial property sector.

Speaking at a JLL Research event held last week at Adelaide Oval, JLL’s Managing Director- (South Australia), Ben Parkinson said, “Office space demand from the technology sector, which is intrinsically linked to the defence sector, is growing rapidly – particularly in the cybersecurity sector.”

“Enquiry for office space from the computing and technology sector increased by an incredible 236% y-o-y in 2021 in Adelaide. This volume of enquiry was in line with the amount of enquiry received from Adelaide’s traditional two dominant office occupiers, the professional services and public sector. If this continues, the tech sector could emerge as a long-term third pillar of the Adelaide office market further bolstered by the burgeoning health and biomedical industry in South Australia,” Mr Parkinson said.

Also supporting the growth of South Australia is the strong leasing activity in the industrial and logistics sector. It is expected that somewhere between 650,000 and 750,000 sqm of new space will be required to meet underlying demand through 2026.

Speaking at the event - Navigating the road ahead for South Australian real estate markets, JLL’s Head of Research – (Australia) Andrew Ballantyne said, “Tight industrial and logistics market conditions is exerting upward pressure on market rents.”

“Adelaide’s average North West prime rents increased by 15% over the 12 months to March 2022. To put it into context, over the five-year period from 2016 to 2021, average prime rents in the North West precinct increased just 3.5%.”

“The imbalance between demand and supply has never been greater in Adelaide with very limited modern efficient warehouse space available for occupiers looking to relocate or expand. This mismatch is beginning to positively impact the land market as developers and owner-occupiers rush to secure large tracts of land. Over the 12 months to 1Q22, JLL Research has recorded annual growth of between 67%-108% in average land values across most Adelaide industrial precincts,” Mr Ballantyne said.

The JLL Research event also highlighted international students as a possible growth area for the South Australian economy.

“South Australia is well-positioned to capture a higher proportion of international students coming to Australia. China remains the number one country of origin, but India is becoming an even more relevant market. A higher number of international students and migrants with a preference for inner city living will further enhance Adelaide’s liveability attributes,” Mr Ballantyne said.

“Adelaide is appearing on the international radar as an emerging world city. We see similar characteristics with cities like Denver where the economy has diversified to have exposure to the health and technology sectors. New employment opportunities will be supportive of population growth through international migration and a higher share of international students,” Mr Ballantyne said.