Industrial property continues to be the most sought-after commercial asset class for both investors and owner occupiers, with low vacancy rates being seen across Western Australia. 

RWC WA joint managing director Chris Matthews said the limited availability of stock has statistically led to a decrease in leasing and sales transactions. 

“Many buyers have caution relating to financing, future interest rates, commodity prices, and the state of the economy which has vendors, buyers, and tenants to be more considered in their upcoming property decisions,” Mr Matthews said. 

“Although vacancies remain low across the metropolitan area, there has been an increase in the availability of smaller and larger assets, while properties ranging from 500 to 5,000sqm have experienced strong absorption.

“Although the supply of industrial properties has seen a modest uptick, for now demand is helping to keep vacancy rates in check. 

“It is expected that we will enter into a period of stabilisation following several years of exceptional performance throughout the 2019-2024 period. 

“Perth, despite being the most sought after industrial investment market, has experienced a lower transaction volume in 2024, mirroring the results seen in 2023 which is surrounded by the lack of available properties in the market for sale or lease compared to the amount witnessed during the 2021 and 2022 period.” 

Mr Matthews said Perth’s industrial market remained strong, with vacancies staying relatively low. He said there was currently 223,555sqm of vacant industrial space for properties under 5,000sqm listed for lease. 

“Although this figure has increased compared to the same period last year, which saw 155,607sqm of available stock, it is still significantly lower than the peak of 930,000sqm recorded in 2020,” Mr Matthews said. 

The north region had the highest vacancy, sitting at 80,516sqm, followed by the southern region at 72,009sqm, and the east with a vacancy of 71,030sqm. 

“Traditionally, the south precinct has had the lowest proportion of available stock, while not the lowest this period, it remains relatively tight,” Mr Matthews said. 

“The east precinct has fallen below the south recording 71,030 sqm of available space, however, this is still an increase from the 46,666sqm recorded last year. 

“The north precinct has consistently experienced higher vacancy levels, primarily driven by a large number of smaller listings, particularly in the Malaga and Wangara areas.” 

Industrial rents have grown astronomically since 2020, but the Perth market has seen some stabilisation in 2024. 

“Following a period of strong tenant demand over the past few years, we have recently witnessed a stabilisation of rental rates, however, there is still the occasional transaction that shows a much higher rate than the standard figures, which is related to right tenant, right space and right time,” Mr Matthews said. 

“Persistently low vacancy rates have ensured that rental growth continued robustly through the end of 2022, before moderating throughout 2023 and 2024. 

“The entire Perth industrial market has benefited from these substantial gains, which have established a new benchmark for tenants moving forward. 

“However, further significant increases are unlikely, as the urgency and competition previously observed in the market is somewhat declining and tenants are applying a little more rationale to their business decisions.” 

Industrial sales volumes have fallen in 2024, after seeing record highs in 2021. 

“2021 marked an exceptional year for the industrial property sector, which emerged as the front runner in terms of returns,” Mr Matthews said. 

“Sales volumes reached unprecedented levels, with both experienced and novice investors jumping on the industrial bandwagon, driving transaction volumes to approximately $3 billion. 

“Owner-occupiers also sought to acquire real estate through their SMSFs to shelter themselves from rising rental rates and diminishing vacancy. 

“Moving into 2022, several inexperienced buyers exited the market, while others persisted, purchasing properties in anticipation of continued rental growth. 

“Whilst sales volumes show the market slowed significantly in 2022 and remained challenging in 2023 we feel from our daily interaction with buyers and sellers that this decrease in sales volume is more a case of a very tight market with sellers not as willing to transact as opposed to buyers not willing to buy. 

“We put this down to limited supply which has resulted in a total sales volume of $1.1 billion for the year. 

“During the first five months of 2024, only $262.6 million worth of properties have changed hands, with limited largescale assets being transacted. 

“Vendors are adopting a ‘wait and see’ approach to their property decision-making, seeking greater clarity regarding interest rates and the state of the economy. 

“We have an abundant amount of buyers on both the owner occupier and investment front so when stock is listed it is still clearing very quickly.”