Industrial vacancies rise albeit more slowly

Industrial vacancies rise, albeit more slowlyTotal industrial vacancy on Australia’s Eastern Seaboard has continued to increase but at a slower rate, according to Knight Frank’s ‘Industrial Vacancy Analysis’ research report.Vacancy in east-coast industrial property was up three per cent over the past quarter and currently sits at 2.38 million sqm. While vacancy has increased 21 per cent in the past 12 months, the research suggests that volatility across three markets has lessened over the past quarter. Sydney was the only market on the Eastern Seaboard to record a drop during the quarter, with vacancy rates down two per cent to 796,156 sqm.”Sydney has seen a steady upward trend in leasing deal volumes, resulting in above-average stock take-up,” said Matt Whitby, Knight Frank group director and head of Research & Consulting. “This is a result of a number of factors, including increased business confidence and high demand in the Sydney area due to the development of key infrastructure. However, it is also due to large institutional owners moving tenants among portfolio assets.” Industrial vacancy in Brisbane increased 13 per cent over the quarter to 680,151 sqm, with an easing in business confidence suggested to be a contributing factor. “The next quarter will likely demonstrate the real demand which exists in the Brisbane market,” Whitby said. Vacancy has also grown in Melbourne over the past quarter, but at a slower rate, with a 1.5 per cent increase recorded. Vacant industrial property in the Melbourne market now stands at 903,724 sqm. Of the industrial space available across the Eastern Seaboard, the Knight Frank research shows that there’s slightly more prime space available than secondary accommodation, with prime industrial space accounting for 52 per cent of the total vacancy rate, up from 45 per cent 12 months ago and 37 per cent two years ago.Whitby says current market conditions have played a role in this, with cost-conscious occupiers looking to secondary stock, and new stock on the market driving up availability. Fifty-eight per cent of take-up was recorded within prime industrial accommodation over the year to April 2015. Brisbane and Sydney recorded the greatest bias towards prime absorption, at 61 per cent and 59 per cent of the annual take-up respectively. In Melbourne, prime space accounted for 53 per cent of take-up over the 12 months to April 2015. To read more click here.