Ray White’s latest research has found there are signs of improvement in Perth’s industrial leasing sector, with employment and population growth leading to positive GSP results.
Entitled Between the Lines – Perth Industrial Sub 5,000sq m Leasing report, the research indicates small business is driving the trend.
“Take-up in industrial space has especially been outstanding over the past two years, highlighting the increased demand for stock, notably for small businesses,” said Ray White’s Head of Research Vanessa Rader.
“While net face rents have been affected, the vacancy situation continues to improve, and the market is likely to enter a period of rental stability until more absorption is recorded.
“Encouraging, is the increase in opportunistic investors inquiring on stock in the Perth market, signalling their anticipation of growth in the short to medium term.”
Ray White Commercial (WA) Director, Chris Matthews, said over the past 12 months, Ray White Commercial’s vacancy survey of the sub-5,000sq m industrial market across Perth had resulted in a take-up of over 130,000sq m, being the second year of substantial absorption.
“This improved confidence has translated into a total of 854,340sq m of vacant stock which is actively being marketed (down from 985,130sq m),” Mr Matthews said.
The Northern precincts have seen the greatest take-up over this period, accounting for 38.64 per cent of stock, compared to 41.98 per cent six months ago.
“This market has a high volume of smaller stock available, resulting in the average vacancy of just 594sq m.
“Right now, there are 1,212 Industrial properties under 5000sq m currently listed for lease across the Perth metropolitan area, this is down 18.98 per cent over the last year.
The stand-out performer has been the smaller size range 0-500sq m which now represents 46.32 per cent of total listings, down from 64.44 per cent 12 months ago.
“The Northern precincts have enjoyed the greatest level of take-up for these smaller assets, followed by the East over the last year, which is reflected by the slight reduction in rents.”
Mr Matthews also said there had been the greatest improvement in vacancies across the Eastern precincts within the smaller sub-1,000sq m size buildings.
According to the report, Canning Vale, Welshpool, Belmont and Kewdale all reduced their number of vacancies.
The reduction has been attributed to growing local businesses, as well as tenants looking to upgrade into better-quality accommodation during this ‘tenant market’.
“We’ve witnessed some improvement in confidence surrounding the Perth industrial market over the last six months; this has resulted in take-up in space, however, slightly at the expense of average net face rents, especially for properties of a lower standard.
“With high competition in the market, there has been a greater acceptance by owners to correct their rental expectations in order to secure a tenant; with absorption now enjoyed, rental declines have moderated.”
Mr Matthews said rents have shown stability over the last six months, which may signal the end of rental contractions in the short term.