Sydney’s Inner West is the tightest precinct for industrial vacancy.

Our recently-released Sydney industrial precinct report found robust leasing demand and low supply in the precinct has kept the vacancy the lowest among all precincts at 14,000sq m, which is 59% below the three-year average.

There was 44,000sq m of take up over Q2, 74% above the three-year average of 25,000sq m

Manufacturing, as the most active sector over the quarter, contributed 46% of total take-up, supported by Pac Trading taking circa 11,200sq m in Goodman’s Rosehill Industrial Estate. 

Average prime net face rent in the Inner West was reported as stable at $214/sq m, while secondary rents averaged $176/sq m.

Some 70,000sq m of new supply is expected in 2024, which is 25% lower than 2023 .This new supply consists of two major developments – WH A1-A3 in Chullora Distribution Centre and 2 Christina Road, Villawood.

Vacancies normalising in other submarkets of Sydney’s industrial market

The South precinct

The South precinct of Sydney’s industrial market has the second highest vacancy, at 34,000sq m.

This precinct saw 12,000sq m of leasing take up in Q2, which was 65% above the five-year average. Occupier demand in this ‘last mile’ precinct has been dominated by transport/logistic operators. 

Premium rents are still achieved in the South precinct, with current prime rental spreads to Other West at 38%, South West at 42% and Inner West at 35%. Prime net face rents averaged $328/sq m and secondary averaged $268/sq m in Q2.

64,000sq m of new supply is expected in 2024, with multi-storey warehouses leading the supply pipeline.

The South West precinct

In Sydney’s South West precinct, vacancy was 83,000sq m, with 47,000sq m of take up in Q2. Tenant demand in this precinct is led by manufacturers and wholesalers, which took up a combined 58% of space over Q2. 

Net rent averaged $190/sq m for prime and $115/sq m for secondary in the South West precinct.

113,000sq m of new supply is expected to be completed in 2024.

The Outer West precinct

Vacancy in Sydney’s Outer West precinct is 118,000sq m, accounting for 47% of overall industrial vacancy in Sydney.

Take up volumes fell to a year-low at 58,000 in Q2, with spec development accounting for 40% of deals, backed by DB Schenker securing  circa 17,400sq m of speculative space in Oakdale West Industrial Estate. 

Net face rents have held flat since Q4 2023, with prime rent standing at $203/sq m and secondary at $168/sq m. 

A record 619,000sq m of supply is expected to be delivered this year.

By Knight Frank Associate Director, Research and Consulting Marco Mascitelli.