Melbourne drives industrial space leasing to new high as rents surge

Leasing volumes were also significantly higher in Adelaide (153,000sq m) and Perth (186,000sq m) over the first nine months of the year, but fell sharply in Brisbane(240,000sq m).

“Lockdowns continue to accelerate the major growth trends for industrial and logistics as more consumers take their non-discretionary and discretionary shopping online,” Sass J-Baleh, national head of industrial and logistics research for CBRE, said.

“As a result, we’ve seen more e-commerce and associated transport and logistics activity in Melbourne than anywhere else in the country.”

Retailer-led growth

In line with the growth of e-commerce spending, which reached $51 billion in Australia over the 12 months to August, up 30 per cent year-on-year and 14 per cent of total retail trade, according to the NAB Online Index, retailers led the way on take-up nationally of warehouse space in the third quarter of the year, accounting for 35 per cent of all leasing transactions.

E-commerce-related occupiers such as Amazon and Kogan-backed eStore Logistics have leased nearly 600,000 square metres nationally in the year to date, with their activity expected to approach 1 million square metres by year’s end, according to CBRE.

Record take-up of industrial space and very low vacancy rates have also put a rocket under industrial rents.

According to JLL Research, prime industrial rents rose by an average of 3.1 per cent over the third quarter – the highest level recorded in a single quarter since 2004.

Secondary rents increased by an average of 3.7 per cent – the highest single quarter increase ever recorded.

The real estate firm recorded 1.1 million square metres of gross take-up of warehouse space over the quarter, the third quarter in a row that leasing has exceeded 1 million square metres.

Prime industrial rents in Melbourne have risen more than 10 per cent over the past 12 months to September, according to JLL. Prime Sydney rents are up about 4 per cent, while Perth rents are up 8 per cent and Brisbane 7 per cent, year-on-year.

“The level of competition that we are seeing on almost every asset that comes to market is giving landlords the edge in lease negotiations,” Peter Blade, who heads up JLL’s logistics and industrial agency business, said.

“Existing and immediately available assets are currently demanding a premium, which has caused significant uplift in rents over the last quarter.”

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