Greater Enquiry Levels in Perth Industrial Leasing Market
Greater levels of enquiry and more realistic owner expectations regarding vacancies and rents is expected to result in further stabilisation of Perth’s industrial leasing market in the next 12 months, says Ray White Commercial.
Ray White Commercial WA Director Stephen Harrison said despite continued challenging economic conditions, there has been an improvement to take up and flexibility in terms of rental rates, incentives and lease terms.
“While this has resulted in a sharp decline in face rents this year, it has improved the vacancy level and brought vibrancy into some suburbs where confidence levels have been low,” Mr Harrison said in the Between the Lines Perth Industrial Sub 5,000 sqm Leasing Market report April 2017.
“With the continuing take up of stock and increasing, albeit, low levels of confidence, we expect to see a further stabilisation in market conditions over the coming 12 months.”
Ray White Commercial Head of Research, Vanessa Rader, said recent analysis of vacant industrial stock across the Perth industrial market has found close to 760,000 sqm of vacant stock in the sub 5,000 sqm range which is actively being marketed.
“The bulk of stock is in the north of the city representing 355,564 sqm or 46.83 per cent, which is up from last period where the share between and north and east was more inline,” she said.
“The east region has shown the best take up over this period and now represents 264,424 sqm across 312 properties. South continues to maintain the smallest part of the pie with only 139,265 sqm of vacant stock recorded or 18.34 per cent. The more affordable nature of this location has kept this vacancy level lowered.”
Ray White Commercial WA Director, Chris Matthews, said despite negative economic sentiment in WA, owner expectations are more realistic which has resulted in an improvement in activity levels with 1,062 properties listed for lease across Perth as at March, 2017.
“The bulk of vacancy comes from the smaller size ranges with 533 separate offerings in the sub 500 sqm size range, most of these are in the north representing 53.10 per cent of the total pool or 83,418 sqm.”
Chris Matthews said face rents were continuing to stabilise since the peak rents achieved in 2012.
“Encouragingly the rents achieved are above the rates achieved pre-2007 (except north) and the more active eastern precinct has experienced a lesser fall of around 15 per cent over the same timeframe to average $90 per sqm,” he said.
“Looking at the last 12 months, we have witnessed owners now more accepting of the current market conditions and opting to lower rents, as well as offering incentives or shorter lease terms to tenant their properties. This has resulted in improvements in take up with a more obvious fall in rental levels, reducing between 7–18 per cent in the last year alone across all regions.”