Large offshore investors have continued their appetite for industrial and logistics stock across the June quarter, according to CBRE’s latest Industrial MarketView report.
Q2 2016 saw some signs of improvement across the Australian industrial economy. Following 0.5% annual growth in industrial GDP in the March quarter, PMI reached its highest level since June 2002 in this quarter, albeit falling back slightly in May.
CBRE’s Senior Managing Director, Industrial & Logistics, Pacific, Matt Haddon said that a number of large portfolio transactions finalised in the quarter.
In May, Charter Hall sold eight assets for $135 million, while in June JP Morgan sold six assets for $250 million and Goodman sold 13 assets for $640 million.
“These portfolio sales reflect the continued depth of the market which is seeing high levels of enquiry, particularly from offshore groups,” Mr Haddon said.
According to the report, prime indicative yields remained unchanged in Q216, with only Perth recording a 10bps compression.
Mr Haddon said that secondary assets are becoming increasingly popular with international investors, particularly in Adelaide, Perth and regional areas.
“Offshore buyers are seeking better returns and so are looking to secondary buildings in non-core locations with more attractive yields,” Mr Haddon added.
CBRE Senior Research Manager Kate Bailey said that jobs across the industrial market grew by 3.1% y-o-y, the strongest growth since December 2008.
“A large number of construction projects in the Eastern states has increased the number of jobs available, however, the bulk of industrial jobs growth has come from the transport, postal and warehousing sector which has a 7.7% y-o-y increase in jobs reflecting the changing nature of the industrial economy as it moves from being production based to importing and warehousing goods,” Ms Bailey said.
Industrial rents growth was flat across most markets with Sydney the only market to show positive rent growth. Rents in Sydney have increased 1.9% y-o-y due to the limited supply released onto the market. In Melbourne, the opposite is true, with the large amount of new stock in the market causing super prime net face rents to fall by 3.1%.
“Rents are close to the bottom of the cycle in most regions except for Sydney and we would expect stability from the second half of 2016,” Ms Bailey added.
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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.