Industrial Rents Tipped To Surge

Tight vacancy rates and ongoing high demand are likely to see more upward pressure on industrial rents.

Recent analysis by CBRE predicts a sharp escalation in rents for prime warehouse space in Australia’s capital cities, warning occupiers to anticipate another double-digit increase over the next year.

CBRE found that industrial property with a vacancy rate under 4% experienced an average rent rise of 14.2% year-on-year. Meanwhile, cities with a higher vacancy rate, above 4%, recorded less than half this increase, averaging 6.5%.

With the lowest industrial vacancy rate in the Asia Pacific region, Australia recorded an average of just 0.6% for prime space in the first quarter, compared to the regional average of 7.1%.

The scarcity of space is most acute in Sydney and Perth, which have the nation’s lowest vacancy rates at 0.3% and 0.4% respectively.

These ultra-low rates, driven by surging demand from the e-commerce sector and low supply because of construction delays and zoning issues, have contributed to a 27% rent increase over the past year.