Ride on coat-tails of e-tail
INDUSTRIAL property landlords are confident of taking the momentum of increased sales into the new calendar year, based on expectations of even more demand for e-tailing.
Having spent the past few years overshadowed by the office and retail sectors, the sheds division is now enjoying the spotlight.
While prices for land remain relatively unchanged, the limited supply of developable land near established infrastructure is expected to underpin the sector in the coming year.
According to agents, all industrial zones of Sydney - south, south-west, north and north-west - will benefit from renewed interest in distribution centres to accommodate the goods that are bought on the internet and must be stored, sorted and sent to customers.
At the recent annual meeting of the Goodman Group, the country's biggest listed industrial landlord, the chief executive, Greg Goodman, said he was expecting a busier year.
''We are the dominant providers of industrial and business space in Australia and New Zealand, where the undersupply of high-quality space is driving development demand,'' Mr Goodman said.
The group has more than $650 million of development work in progress across the two countries. The NSW managing director at Jones Lang LaSalle, Michael Fenton, said the number of deals completed so far this year showed the Asia-Pacific region had outperformed other major markets.
''The continued outperformance of the Asia-Pacific economy is a good sign for the Australian commercial property market,'' Mr Fenton said.
''Despite a limited pipeline of sales on the market, investment volume remains steady.''
In the investment market, sales volume in Sydney also increased in the third quarter, with $151.7 million being recorded, bringing the total in the past 12 months to a healthy $674 million.
Along with transacting the BlackRock property trust for $115.2 million last quarter, Jones Lang LaSalle concluded the sale of two NSW industrial assets from Mirvac Group to Aviva.
''This strategic acquisition paves the way for Aviva to grow their industrial portfolio in Australia through further selective acquisitions, joining the Singaporean GIC Real Estate as a dominant active offshore investor of Australian industrial real estate,'' Mr Fenton said.
CBRE's regional director, industrial and logistics services, Joshua Charles, said tight supply conditions had led speculative developers to re-enter the market, with a focus on the eastern seaboard.
''Sydney in particular is seeing the re-emergence of speculative development in the prime market to meet growing occupier demand,'' Mr Charles said.
''Supply-side factors such as land releases and planning reform are also contributing to rising demand for prime space in certain states. In this regard, Victoria enjoys a competitive advantage with lower average land values, which sell at a discount of up to 30 per cent compared to some areas of Sydney.''