WHILE sentiment has been improving over the last year, confidence is now being displayed by way of transactions and vacancy reduction in Perth’s industrial market, according to Ray White Commercial’s latest Between the Lines research.

Ray White head of Research Vanessa Rader said there had been an improvement in the take-up of industrial space which had been growing over the past three years.

She said that while Gross State Product levels had improved, aided by the uptick in commodity prices and growth in exports, employment growth had been improving at a limited rate.

At a glance:

• Ray White research finds improvement in take-up of Perth industrial space driven by increased demand from small business
• Past 12 months sees take up of more than 430,000 square metres in the sub 5,000 square metre industrial market
• The North precinct showed greatest take-up activity over the period

“Low interest rates have done much to stimulate small business, but greater population growth is needed to further enhance the vibrancy of the Perth economy,” Rader said.

“Encouragingly, there has been the improvement in take-up in industrial space, which has been growing over the past three years.

“This highlights the increased demand for stock by small businesses which has not gone unnoticed by investors.”

Ray White Commercial (WA) Director Chris Matthews said over the last 12 months, Ray White Commercial’s vacancy survey of the sub 5,000 square metre industrial market across Perth had resulted in a take-up of over 430,000 square metres; being the third year of positive net absorption.

“This improved confidence has translated into a total of 904,973 square metres of vacant stock which is actively being marketed - down from 947,991 square metres,” Matthews said.

“The North precinct has enjoyed the greatest take-up over this period and now accounts for 38.89 per cent of stock compared to 41.98 per cent 12 months ago.

“This market has a high volume of smaller stock available resulting in the average vacancy of just 647 square metres.

“The East now accounts for 335,575sq m (37.08 per cent), with the bulk of absorption over this last year being in suburbs such as Canning Vale, Welshpool and Belmont reducing their vacancy levels.

“While the South continues to maintain the smallest vacancy with 216,811 square metres, this market has a greater mix of vacancies across all sizes, while the affordable nature of this location has also aided in keeping this occupancy level up.

“There are 1,122 industrial properties currently listed for lease across the Perth metropolitan area, this is down 9.95 per cent over the last year or 19.40 per cent over a two-year period.”

Matthews said for the second consecutive year they had seen the greatest improvement in vacancies across the Eastern precincts.

Canning Vale, Welshpool, Belmont and Kewdale had all reduced their number of vacancies, notably in the smaller size range for growing local businesses as well as tenants looking to upgrade into quality accommodation during this ‘tenant market’, he said.

“It’s been an exciting time for the Perth industrial market, although vacancies remain high, rents look to have reached their bottom,” Matthews said.

“An uptick in leasing activity during 2019 has seen some slight upward change in net face rents for prime assets albeit, only very limited, while after some further stock absorption, secondary rents are likely to follow slowly after with some lag.”

Click here for the full report - October 2019 – Perth Industrial Sub 5,000sqm leasing market

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