Continuing the theme from 2020, the Sydney industrial property market remains tight as the middle of 2021 approaches. 

Traditional industrial hubs such as Wetherill Park/Smithfield continue to be extremely popular amongst business users, although opportunities are scant given the limited land available for development. This is not to say deals are not occurring. In one such recent deal, Coutts Wetherill Park Director David Ferreri in conjunction with JLL recently negotiated a 1,105sqm lease deal at 8 Cullen Place Smithfield where Oxworks Pty Limited, one of Australia’s largest fencing manufacturers, secured their new edition to their network signing a seven year lease term at $145psm + outgoings + GST.

Demand for property for both lease and sale significantly outstrips supply which is driving up sale and lease prices. Naturally, the most sort after space is A-grade property which is generally snapped up quickly when coming to the market. With overall demand high and vacancy low, prospective tenants have been forced to consider lower grade properties, properties located in outlying areas and pre-lease opportunities.

Traditional industrial hubs such as Wetherill Park/Smithfield continue to be extremely popular amongst business users, although opportunities are scant given the limited land available for development. This is not to say deals are not occurring. In one such recent deal, Coutts Wetherill Park Director David Ferreri in conjunction with JLL recently negotiated a 1,105sqm lease deal at 8 Cullen Place Smithfield where Oxworks Pty Limited, one of Australia’s largest fencing manufacturers, secured their new edition to their network signing a seven year lease term at $145psm + outgoings + GST.

The new aerotropolis around the under-construction Nancy Bird Walton Western Sydney International Airport is proving a major attraction to business, given the lack of curfew and commitment to both passenger and freight services. Construction has begun and is likely to continue to be a beacon for tenants and owner-occupiers seeking a position near this vital transport hub, with easy access to Sydney’s ports, train and road links, as well as domestic and international air links. New facilities (that are not available in other industrial zones) are available to those businesses looking at taking a long term view. Major occupiers, including transport and distribution users,  defence contractor  Northrop Grumman and Japanese manufacturer Mitsubishi Heavy Industries and bank Sumitomo Mitsui Financial Group, have already committed.

A combination of yield compression (partly spurred on by historically low interest rates), growth in rents (due to a lack of supply), lack of available land for development and competitiveness amongst developers/owners to secure sites has, and we expect, will continue to drive both sales and lease prices across Sydney’s industrial markets.