New Industrial revolution for South Sydney

‘New Industrial’ revolution for South SydneyThe rise of ‘New Industrial’ occupiers is changing the dynamics of market pricing in South Sydney.According to new research by JLL, ‘The Rise of “New Industrial” in South Sydney’, the area is evolving from “a blue-collar, industrial working-class area to an upmarket, mixed-use precinct with a rapidly growing local residential population” due to greater high-density development and ongoing gentrification. The shift in dynamics reflects an emerging ‘New Industrial’ class, which includes hospitality, showroom, creative office and recreational firms. JLL noted that these were “companies not typically known as industrial users taking up traditional industrial space in order to service the local residential population”. This was having an impact on market pricing dynamics within the South Sydney industrial market.”The push into South Sydney by ‘New Industrial’ occupiers is creating significant uplift in industrial rents and values through the diminishing industrial stock base, and through greater competition in the occupier market,” said JLL’s associate director of industrial for South Sydney, Keegan Ridings.Moreover, Ridings said that South Sydney, once known for logistics and manufacturing, was increasingly being viewed as a residential growth hub. ‘New Industrial’ occupiers were “increasingly competing with traditional industrial occupiers for space”, Ridings said. “These factors have far-reaching implications for the South Sydney industrial market.”JLL said the alternative uses undertaken by ‘New Industrial’ occupiers generally commanded higher rates per sqm. “On a typical lease over a gross lettable area of around 00 sqm, traditional industrial occupiers in South Sydney would expect to pay between $130 and $160 per sqm,” JLL noted, adding that this was “well below the achievable rents for ‘New Industrial’ occupiers. “For example, firms in the hospitality sector will pay an average of between $300 and $400 per sqm while showroom users or bulky goods retailers will pay between $200 and $300 per sqm,” the report said.However, traditional industrial occupiers were expected to remain. “Key industries such as the transport and logistics sector are likely to remain in South Sydney,” Ridings said.”The precinct’s close proximity to the CBD, Sydney Airport, Port Botany and important road corridors underlines the ongoing strategic importance of South Sydney as an industrial hub.”For more information go to: http://www.jll.com.au/australia/en-au/research