Australian manufacturing facilities are continuing a run of being in high demand by investors, as JLL data shows that take-up of manufacturing space by tenants at the half year mark is about to surpass 2020 full year levels.

JLL Research shows that take-up of industrial space in the manufacturing sector for the first six months of 2021 totalled 496,200 sqm - almost reaching full year 2020 levels of 510,560 sqm.  

JLL’s Head of Capital Markets, Industrial & Logistics - Australia, Tony Iuliano said, “Over the past 18 months there has been in excess of $1 billion from 20 manufacturing facilities transacted nationally with some of the major corporates to transact including Arnott’s Biscuits, O-I Glass and Sara Lee.

“One of the notable sales this year included two Patties Foods manufacturing facilities within Victoria which sold for $141 million, bought by Charter Hall Direct Industrial Fund 4 on a 30 year sale and leaseback.  This sale included Patties Foods’ main production facility in Pakenham and the world’s largest pie manufacturing facility in Bairnsdale.”

JLL’s Senior Director, Industrial Research - Australia, Annabel McFarlane said, “Manufacturing is a key sector feeding demand for Australia’s industrial space. In 2021, take-up of industrial space by manufacturing businesses is on track to go beyond the 10-year average of just under 571,500 square metres.  

“Longer term macroeconomic themes are supporting the sector. Rising offshore wage and shipping costs support the argument for further onshoring of source materials and manufacturing processes.

“Manufacturing businesses leading demand for warehousing space this year includes GAM steel (59,700 sqm), Electrolux (19,960 sqm) and Concept Architectural Systems (13,500 sqm).  Transport equipment manufacturing businesses have also been in expansion mode in Melbourne precincts over the first half of 2021 accounting for five individual deals and over 42,000 sqm of take up.

“Manufacturing businesses are an important occupier group in all industrial markets. Over the last 10 years, manufacturing has accounted for 20% to 30% of all take up in Melbourne (22%), Sydney (23%) and Brisbane (27%). The sector is less relevant for Perth 15%, but in Adelaide manufacturing is the most dominant sector with 40% of all take up over the last 10 years,” said Ms McFarlane.

JLL Chart:  Gross Take-up by Sector – Australia Source: JLL Research as at 2Q21