The Perth industrial market is going through a period of high vacancy as business confidence and sentiment have dampened due to the poorer economic position of the state. While WA continues to grow its GSP position (albeit at a slower rate), small business growth has been limited. Couple this with the increase over the past few years of SMSF’s purchases of small industrial product and record low interest rate which has fuelled these higher levels of investor stock available to this market.
As at September 2014, Ray White has monitored a total of 724 leasing listings in the sub 1,500sqm size range, these listings represent a total of 402,161sqm of vacant space across metropolitan Perth. More than half of these listings are located in the North, while the East represents 33.4% and the South the smallest portion of 15.5% or just 62,403sqm.
The suburbs which suffer from the greatest volume of vacant stock include Wangara, Malaga and Osborne Park in the North. These three suburbs alone account for 135,263sqm of stock being 65.8% of the total vacancy in the North. Of these listings Malaga’s listing size is the smallest with the average size of each vacancy just 420sqm compared to Wangara at 559sqm and Osborne Park at 583sqm. In the East, Canning Vale and Welshpool account for approximately 60% of the vacancy in this market, however the average listing size is larger at 628sqm and 708sqm respectively. The South accounts for just15.5% of all vacancy across Perth, the bulk being in Bilbra Lake, the 60 listings total around 30,000sqm while the remaining stock is well split across Cockburn, Jandakot and O’Connor.
A combination of dampened State economic growth and the increase over the past few years of private investor and SMSF’s purchases (due to record low interest rates) has fuelled these higher levels of investor stock available to this market.
The average listings sizes in each suburb represented the large industrial unit market, across the total market 55.3% of all listings represent the sub 500sqm market, while the 500–1,000sqm range represent 31.4% of the listings. The North suffers from the smallest average listing size of just 503sqm, as 63.2% of the listings in this area are within the 0–500sqm size range, largely due to the volume of office/warehouse accommodation. The South, which provides a high volume of strata industrial unit stock averages 567sqm per listing with the majority of stock (57.3%) represented in the smallest size category. The East which is a more established market is home to a greater mix of larger older properties and modern industrial unit facilities, resulting in the average of 658sqm, this region has the largest proportion of vacant stock in the 1,000–1,500sqm size category of 45.6%, followed by the sub 500sqm category with 38.3%.
Competition in the market has also raised the issue of incentives which have not been prevalent in this sector for some years. Currently rent free periods of up to 3 months on a 3–5 year lease and other incentives, dependent upon the property location and presentation have also been offered to prospective tenants.