High Australian dollar drives change in emphasis from users and demand for prime space
February 22, 2013
Sydney, Brisbane and Perth have made it into real estate firm CBRE’s world
top-10 most expensive prime logistics property
markets.
They mark
Australia as the only country to have multiple cities make the grade, but this might not last long if the resources boom loses steam, CBRE warns.
And while the high Australian dollar was driving this performance, as expected, it appears that online commerce, or e-tailing,
was not a prime factor.
Greater Tokyo topped the scales, with Sydney 6th, Brisbane 8th and Perth in 10th place.
Though occupier sentiment in Sydney remains cautious, the report highlights a strong preference still exists for good-quality, well-placed logistics space, CBRE says.
With vacancy levels low for such stock, pre-commitment activity has been prevalent, helping to boost prime rents during the last quarter of calendar 2012.
CBRE notes that there was a 1.1 percent quarterly growth in the Sydney marker in the quarter but none in Brisbane of Perth.
It warns that this might be a sign of things to come.
“On a more unstable note, demand from transportation and logistics companies linked to the resource sector has weakened amid falling commodity prices and business confidence,” it says in a separate analysis of prime markets.
“Having benefited markedly from the resources-driven sector in the early part of 2012, conditions in Perth and Brisbane stated to weaken in Q4 2012.”
According to CBRE Regional Director Industrial & Logistics Service, Joshua Charles, the vacancy rate for existing A-grade faculties in the major Australian markets was the lowest in a decade.
This was helping support rental increases.
“Incentives on prime logistics facilities are now back to pre-GFC levels,” Charles says.
“Many large retailers are re-organising their distribution networks to incorporate 40,000 sq m to 80, 000 sq m ‘mother ship’ distributions hubs in each state, which is helping drive new construction.
“In this environment, developable land has become highly sought after by industrial REITs, who are looking at opportunities to speculatively building warehouses to get their jump on competitors.”
Expectations are for additional but slight growth in rentals in 2013 and a further increase in speculative construction.
“The high Australian dollar has increased the need for local warehousing as importers ramp up their buying and, by extension, their need for storage,” Charles says.
However, he notes that e-tailing was not having the massive direct effect that many believed.
“Instead, third party logistics groups are picking these up as additional contracts that require more storage space,” Charles says.
