According to JLL Research, yields in the inner east-west and inner-southern precincts of the Adelaide industrial market have tightened to historic levels, off the back of significant investor demand.

Significant occupier demand and a shortage of lettable space in Adelaide is seeing yields tighten across the industrial market, particularly in well-leased assets with strong fundamentals.

JLL’s Head of Industrial & Logistics – (AUSTRALIA), Jamie Guerra andExecutive for Industrial - (SA), Hamish Crouch brokered the off-market deal for 34-40 Bennet Avenue, Melrose Park for $5.3 million.

The business park provides 3,861sqm of tilt-slab office warehouse across five fully leased tenancies with an annual net passing income of approximately $340,000 per annum. Tenants occupying space within the estate include The Benevolent Society, Beacon Lighting Commercial, Down Under Textiles, and Axelent Australia.

Mr Guerra (pictured above) said, “Demand for office warehouse space in Adelaide’s inner precincts is high, with very limited opportunity to secure modern industrial accommodation and a shortage of industrially zoned development sites, which is placing upwards pressure on rents and land values.”

“Take-up of industrial space over the third quarter nationally continues to be led by the Sydney (225,000 sqm) and Melbourne (235,100 sqm) markets – making up a combined 74% of total take-up for 3Q 2020.

“However, we have also seen an uptick in take-up activity for Adelaide and Perth over the third quarter reflecting a strong return in confidence in these markets post COVID-19. The Adelaide market recorded a relatively significant rise in take-up – the largest volume since 4Q 2018.

JLL’s Director of Research - (SA), Rick Warner said, “Industrial land values in the inner south have increased by 20% throughout the past 12-months. This is the strongest annualised growth recorded since JLL Research began tracking the market in 2008.”

“Occupier demand for industrial space has been positive in 2020, particularly within existing buildings. Over the first nine months of 2020, 67% of industrial gross take-up in Adelaide has been into existing stock, compared to just 33% in 2019,” he said.

“Prime industrial yields in the inner precincts have tightened significantly with average upper-end yields moving below 6.00% in the Inner West-East and below 7.00% in the Inner South. These are both historical lows.” Mr Warner concluded. (Pictured below)