Adelaide, 4 June 2013- Despite challenging employment and manufacturing conditions, the Adelaide industrial market continues to see stability in long term rental rates and capital values, with signs of growth emerging for 2013.
Improving conditions in Adelaide’s industrial sector are anticipated to have a stabilising effect on the market over the course of 2013, new research from CBRE shows.
The Q1, 2013 Australia Industrial MarketView report found that during the first three months of the year, demand for leases remained subdued and rents followed course by dipping slightly.
Despite this, CBRE Senior Research Manager of Industrial Markets Luke Dixon said investor appetite had improved considerably over the past six months due to a spike in activity among private and institutional investors, and also more movement from owner occupiers.
“Whilst growth opportunities in the Adelaide industrial market has remained relatively constrained over the past couple of years, there has been a modest upturn in transaction activity, which can be attributed to several large investment assets changing hands over that period,” Mr Dixon said.
“Positive signs are emerging from consumer demand and import figures, which show port container volumes rising in the year to March by 11%.”
Major deals secured in Q1 include the $12.3 million sale of 27-30 Sharp Court, Cavan and 52 East Parade, Beverley for $3.2 million.
Net rents in the outer-north and western region fell during the three month period, with incentives increasing to an average of 7.5%. Secondary warehouse grade B rents also contracted in the quarter, however incentives remained stable at between 9% and 10%.
Prime industrial warehouse yields softened slightly to range between 7.5% and 10.0%, with an indicative yield of 8.75% - slightly softer than the 10-year average of 8.4%. The west is still in demand and is reflective of the lower end of these yields, while the south is more reflective of the top end.
Secondary warehouse yields followed the trend, softening to range between 8.75% and 12.0%, with the indicative yield being 10.5%.
“As the sector stabilises further and consumer sentiment rises, we expect to see modest but positive growth in the industrial market, with current strong interest in prime industrial assets,” CBRE Director of Industrial and Logistics Services David Reid said.
“We are seeing a change in investor mindset from one of uncertainty to opportunity as the market bottoms out and green shoots of optimism return.”
During 2012, 113,036sqm of new industrial space was delivered in Adelaide, while current forecasts anticipate 58,534sqm to be completed this year.
For Australian/international news or global stories, follow us on Twitter.
About CBRE Group, Inc.
