The Savills Industrial Shed Briefing Q4 has found Perth’s industrial rental growth has begun to stabilise.
The results follow strong annual increases in prime and secondary net face rent of 13 per cent and 9.2 per cent, respectively.
“Increased availability in the East and South has eased pressure on incentives, which rose by 2.5ppts in Q4, pushing the prime average up from 10 per cent in Q3 to 11.3 per cent in Q4,” the report, released last month, said.
“This trend has led prime effective rents to decline by 2.7 per cent quarter-on-quarter in those areas.
“Prime and secondary market yields have also expanded by 25bps in Q4, with prime rising to an average 6.4 per cent and secondary to 7.0 per cent.”
Property Council WA Executive Director Nicola Brischetto said there was immense opportunity for the industrial land sector across the state in the short and medium future.
“With economic diversification and greater investment in defence capabilities both firmly on the government’s agenda, we anticipate strong demand for well serviced industrial land supply in the coming months and years,” Ms Brischetto said. “
“The WA Government has acknowledged this. In the 2024-2025 Budget, $500 million was allocated to establishing a Strategic Industries Fund to complete headworks for industrial land in strategic precincts.
“A further $500 million has also been committed to the Fund in a WA Labor election commitment.”
Modelling released by the Property Council WA last year showed an additional 943,000 sqm was needed by mid-2028 to keep up with the state’s projected population growth.
Across the country, the industrial sector is outperforming expectations as investment surges and pockets of stronger demand in Sydney and Brisbane signal a turning point, according to Savills.
“Investors remain committed to increasing their exposure to the Industrial sector, and a shift in the rate cycle will keep the investment momentum running in 2025,” National Head of Industrial Logistics Michael Wall said.
“Although the federal election and anticipated rate cuts may temper deal activity early in the year, the overall momentum is expected to persist.
“There is ample sidelined capital already contributing to market yield compression in Brisbane and yield stabilisation in Sydney throughout the fourth quarter.”
Mr Wall also said institutional investors were now “clawing back” market share from smaller private investors that “stepped up during 2023 and early 2024”.
According to Savills, the rebound in investment over the past two quarters and the “substantial amount of capital waiting on the sidelines” reflect strong confidence in the industrial sector’s future performance as investors continue to recalibrate their risk and return expectations.