Sydney hailstorm dents industrial vacancy rates
A severe hailstorm that hammered parts of Sydney in December has put a significant dent in industrial & logistics vacancy rates, sparking more than 35,000sqm of leasing activity across the city.
11 Feb 2019
CBRE Senior Director, Industrial & Logistics, Michael O’Neill said the December 20 hailstorm caused widespread damage across the majority of Sydney’s metropolitan basin, creating an immediate need from vehicle dent removal companies for space.
“The storm generated demand from vehicle dent removal companies, acting on behalf of major insurance companies, for emergency space to accommodate the influx of customer requests,” Mr O’Neill said.
“Unlike the hailstorm on Anzac Day in 2015, which was severe but localised, this most recent storm affected the majority of Sydney, as well as the Central Coast. The 2015 hailstorm destroyed several large facilities, which needed to be replaced but did not cause such widespread damage to vehicles.”
CBRE’s Industrial & Logistics team negotiated nine leasing deals totaling over 35,000sqm between December 20 and January 1, with locations including Mount Kuring-gai, Homebush, Milperra, Castle Hill, Girraween, Smeaton Range, Alexandria and Banksmeadow.
“Vacancy is already very tight at sub-2% in most Sydney submarkets, so these transactions reflect up to 20% of the vacant stock,” Mr O’Neill said.
Evidencing the recent activity, Action Smart Repairs signed a 12-month lease on a 14,031sqm property at 270 Horsley Road, Milperra. The deal, reflecting a rental of $112.50 per square metre (gross) was negotiated in 12 hours by CBRE’s Keegan Ridings.
In a second deal, Action Smart Repairs also leased two units totaling 2,400sqm at 7-15 Gundah Road, Mt Kuring-gai for a gross rental of $153 per square metre. The deal, negotiated by CBRE’s Ben Byford, was finalised within two weeks.
Mr O’Neill said the hailstorm had had an immediate, albeit temporary, effect on the industrial & logistics market.
“While the majority of these recent transactions are relatively short term, the rents were mostly premium rates given most landlords are looking for longer tenure. Most of these owners will continue to market their facilities for longer term occupation, but now have the benefit of a premium passing income,” Mr O’Neill explained.
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CBRE Group, Inc. (NYSE:CBRE), 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 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 450 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.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of 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 https://www.cbre.com.