Hobart’s industrial sector has experienced significant growth in recent years, with demand from not only local occupiers, but increasingly from national users looking to secure space in Tasmania’s capital.

One of the drawcards for national companies looking for industrial space to operate in Tasmania has been the state’s consistent economic performance. The latest CommSec States of the States report, released in July, named Tasmania as having the country’s best-performing economy, leading the Australian states and territories on business investment, dwelling starts and employment. It was the 12^th time in three years that the state has led the country as the best-performing economy. 

When it comes to the industrial market, land values and rents in Hobart are also more affordable than many of the mainland states, which is another attraction for industrial users, however we have seen rises in recent years. It’s also important to note that construction costs can also counter this relative affordability to a degree, being higher than the mainland.

While national users are taking up more industrial space in Hobart, COVID also led to strong growth in demand from local occupiers with the market in Tasmania mirroring the rest of Australia with huge growth in ecommerce as online purchasing expanded exponentially and better local supply chains were required.

During this time, with historically low interest rates, we also saw many people move from the leasing market to become owner-occupiers, which drove growth in land values.

Hobart’s inner northern suburbs of Moonah and Derwent Park have been the traditional industrial hub of Hobart but with little to no land availability in this area there has been a shift in recent years to the city’s outer areas for land and development. Recent activity has been strong in these outer areas, with more than 100 industrial land sales over the past two years.

Cambridge, which is home to the Hobart International Airport to the east of the Hobart CBD, has become Hobart’s preferred light industrial location, particularly for national companies. This has marked a clear shift in the market, with size requirements now also getting larger. While our capital doesn’t usually see industrial facilities of the scale built in Sydney and Melbourne, of 10,000sq m-plus, we are starting to see a transformation in Cambridge from the smaller 250 - 400sq m units to large 2,000 - 3,000sq m requirements, with occupiers wanting more space. In contrast, two years ago the demand was largely coming from smaller users including tradespeople, builders and developers.

Strong demand has led to growth in light industrial land values of a huge circa 70 per cent over the past two years, while net rents have increased from $150 per square metre to between $200 and $220 per square metre. With such little industrial vacancy, incentives are rarely offered.

While Cambridge is the most sought after area for light industrial in Hobart, Bridgewater and Brighton, north of the CBD, is the industrial logistics and transport hub of the city and has also seen significant growth in terms of subdivision.

Bridgewater is home to Hobart’s largest industrial development –  an 8,000sq m, 18-metre clearance warehouse, privately developed and built for tenant McConnell Dowell to support Tasmania’s largest ever infrastructure project, the New Bridgewater Bridge, a deal facilitated by Knight Frank’s Claude Alcorso and Tom Balcombe.

By Tom Balcombe