Sydney, 31 May 2016- The South West Sydney industrial market is undergoing an insurgence as both tenants and buyers are forced out of South Sydney and the Central West. Re-zoning of once populous industrial precincts has seen an influx of residential developers snapping up properties for high rise residential development opportunities.
Chris Ryan, Industrial & Logistics Manager for CBRE said that rising rents, Sydney’s booming residential market and the globalisation of the Australian economy creating a need for larger and more efficient warehousing options, are forcing businesses out of traditionally popular industrial areas such as Alexandria, Mascot and Botany in the south and Rydalmere, Silverwater and Lidcombe in the west.
“In turn, South West Sydney is becoming so popular that it is now also suffering from a significant lack of stock across the board,” Mr Ryan said.
There is currently 57,586sqm industrial space available for lease between 1,000-5,000sqm in inner south-west Sydney. Of this, only two properties totaling 7,329sqm are considered A-grade and after you take out sub-leases, the only truly vacant option is 2,857sqm at Riverwood Business Park.
The remaining 50,257sqm available is secondary stock, of which 14,091sqm is sublease availabilities.
“As a result, the recently refurbished Kirby Industrial Estate in Revesby has seen 14,828sqm leased by CBRE across seven units in the last eight months. Another 4,232sqm is under offer which leaves only 2,498sqm vacant.”
CBRE’s Chris Ryan, Tom Rourke and Ryan Jennings negotiated the lease agreements on behalf of Kirby Holdings.
Mr Rourke said compounding on the increasing rents in South Sydney and the Central West, are rapidly increasing outgoings.
“Since 2005 outgoings in South Sydney have increased by as much as 52%, mainly due to the increased Land Tax payable on re-zoned areas. This is further contributing to the number of enquiries we are experiencing for suburbs further out along the M5 corridor,” Mr Rourke, Manager Industrial and Logistics, said.
“We anticipate that Moorebank could witness a similar situation with the speculation that much of the industrial in this area could also be rezoned to residential. As a result, businesses will look to capitalise on the increasing residential population with more retail based operations interested in traditionally industrial space.”
Adam Tresidder, Industrial and Logistics Services, said that the trend of pushing out industrial tenants is now being seen further down Sydney’s South West growth corridor.
“Demonstrating this trend CBRE has recently negotiated deals further south, such as Ingleburn and Minto, with a number of tenants being pushed out of Liverpool/Moorebank due to re-zoning and proposed residential developments,” Mr Tresidder said.
“A further contributing factor is the hardening of rents in these areas. Moorebank is seeing net rents around the $115-$120 mark for A-Grade facilities, whereas Smeaton Grange A-Grade rents sit around $95-$100. This coupled with the widening of the M5 as well as the new M5 tunnel is seeing a great interest and further migration of tenants into areas once deemed too far out of the way,” Mr Tresidder concluded.
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About CBRE Group, Inc.
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 (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.