Fresh push for industrial sites
Industrial property has emerged as one of the more sought-after sectors, with demand now outstripping supply, particularly along the eastern seaboard.
Groups such as DEXUS Property, Goodman Group with its new Interlink in western Sydney (pictured), Charter Hall and Investa Property, among others, are all looking to expand their portfolios.
The trigger is the growth in e-commerce that has led to demand for storage and distribution of goods bought online. In addition, the rise in conversions of industrial assets into residential, such as those being done by Meriton, is shrinking supply.
It is expected that sales of the assets will rise in the coming financial year, driven by the listed and unlisted property trusts and wealthy individuals. The billions of dollars earmarked by the NSW government for infrastructure and transport in Sydney's west will make the areas around the M2 and M4 motorways more attractive.
Jones Lang LaSalle managing director of NSW and head of industrial Michael Fenton said that, according to the company's research, there had been close to $720 million of major industrial sales in the first half of 2013.
Mr Fenton said that while that was within the normal range for recent years, second-quarter sales were only $235 million compared with $483 million in the first quarter.
"A few more sales might close prior to June 30, resulting in the second quarter being revised up by no more than $80 million or so," he said. "There has been a stark slowdown in transaction activity in the last three months.
"With pricing of industrial assets strengthening, we expect a significant pick-up in transactions volumes.
"There has certainly been a shift in vendor sentiment. Owners of well-located prime and secondary-grade assets can sense the growing wave of capital-seeking opportunities in the industrial sector will shift pricing further in their favour in the second half of this year."
Mr Fenton said there was a bigger list of buyers than sellers and he did not expect the market dynamic to change soon.
"Further analysis of the stock sold so far this year shows that if related-party transactions, land sites, residential conversion sites, sub-$10 million sales and assets in non-core product or locations are stripped out, only half of the pipeline of $720 million of sales would be considered 'available opportunities' for groups looking to invest in warehouse and logistics product today," he said.
"This further highlights the mismatch between investment capital and available product we will see for the remainder of this year."
According to new research from CBRE, Sydney, Perth and Brisbane all rank in the global top-10 list of cities with the most expensive prime logistics rents. The firm's Global Industrial View report says the wider Asia-Pacific region dominates the top-10 rankings.