Adelaide’s established North and North/West industrial suburbs such as Regency Park, Wingfield, Gillman and Cavan have seen a consistent increase in property values and rents over the last three years according to JLL Industrial Director Martin James.

He said significant shortage of industrial properties available to lease, combined with almost unprecedented levels of tenant demand, is generating strong rental growth resulting in property values reaching generational highs.

Mr James said that over his career he has never seen the vacancy rate of industrial property as low as currently experienced within the South Australian market.

This lack of availability of space for lease has had the corresponding effect of pushing up rents, with this likely to continue for the foreseeable future.

As a result, major warehouse occupiers looking to move into facilities that will meet their occupancy goals for the next 10 years are driving a level of industrial development activity within the SA market that has been rarely seen. This level of activity is also seeing a corresponding level of interest in the SA Industrial market by national property and development companies.

However, traditional SA industrial property owners are faced with a dilemma – divest or reinvest?

“Long term property owners have to balance the current 30-year peak prices being paid for industrial property against the investment required to keep the asset competitive for the next 20,” Mr James said.

He said the premium tenant market now demanded industrial facilities which were high clearance, often 12m or higher, incorporate ESG and sustainability elements and exhibit operational flexibility such as heavy vehicle access and 24-hour operation.

“Much of Adelaide’s industrial North was developed in the 70s and 80s and were often only constructed to heights of between 6-8m and included large offices which are now redundant.”

“Property in these inner areas now must compete with modern industrial development and it is prudent for owners of existing or older industrial assets to consider their long-term strategy. Is there the opportunity to re-develop or re-design the asset to improve marketability and return over the long term or is now the right time to consider the sale of the asset and realise the value uplift?” said Mr James.

He said Regency Park is completely buffered from nearby sensitive land use and allows for heavy vehicle truck movements, vital to supply chain and logistic requirements.

“With major tenants seeking to incorporate sustainability elements into their industrial accommodation wherever possible, it is an ideal time to consider how these may be addressed as part of any future redevelopment. One only need look at major retailers such as Woolworths and Coles and the importance and focus which sustainability plays within their respective businesses and all elements of their supply chain,” said Mr James.

He said despite the most recent inflationary pressures there remained very strong demand for well located, well designed industrial property for lease, owner occupation, re-development or investment.  

Kym Hutchins, fellow Industrial Director at JLL said: “We have seen strong levels of tenant enquiry for industrial warehousing within the North and North/West, resulting in a historically low vacancy rate.

“The lack of existing industrial property is also driving demand for suitably zoned industrial land and we are actively working with our clients to bring new land opportunities to market as quickly as possible.” said Mr Hutchins.

“In the lead up to Christmas and continuing into 2023 we expect to progressively release in the order of 25 Ha of industrial land to the market,” said Mr Hutchins.

“Even with the current economic challenges, the industrial demand/supply imbalance has resulted in significant shortages of stock, both in terms of buildings and land, neither of which can be replicated quickly. As a result, we anticipate that demand for industrial accommodation, be it leased investment, existing built form or industrial land will continue for the foreseeable future.” said Mr Hutchins

Should anyone be seeking industrial land to purchase or alternatively be considering the sale or redevelopment of their industrial asset both Martin and Kym would be pleased to assist and are contactable via their contact details below: 

Related Reading:

Renewal SA offer major industrial site Gillman for sale through JLL  | The Industrialist

Record prices set in Adelaide’s industrial core by JLL  | The Industrialist

JLL appoints Martin James Head of Industrial & Logistics in South Australia | The Industrialist

Why Adelaide’s got a swagger | The Industrialist