This article is from the Australian Property Journal archive
AUSTRALIA’S boosted migration program will mean Sydney requires 3.6 million sqm of industrial and logistics floor space by 2031, but town planning challenges are plaguing what is already the world’s tightest market and the city could lose business to other capitals.
CBRE’s latest Sydney Industrial and Logistics Land Supply shows that new development supply expected to be delivered in 2023 and 2024 has a high pre-commitment level, at 63% and 48% respectively.
Its vacancy is at an eye-watering 0.2% and is forecast to remain at sub-2% over the next two years.
Just 4% of the total industrial-zoned land in the Sydney metropolitan region is undeveloped and serviced, and supply is falling well short of demand from transport and logistics, e-commerce and manufacturing occupiers.
CBRE’s Australia and New Zealand regional director, industrial and logistics Cameron Grier said the available pipeline of industrial and logistics land on the eastern seaboard remains very tight by historic levels.
“However, while Queensland and Victoria are running low on land, Sydney faces a different dilemma with vast amounts of zoned land but planning authority challenges, which means that most of this land won’t be unlocked until way into the future.
“This could potentially see some larger occupiers being forced to consider Melbourne or Brisbane until developers can provide certainty of delivery on many sites.”
“The Aerotropolis will ultimately relieve most of Sydney’s future land pressure challenges, however, if the lessons of Kemps Creek around planning and timeframes are not learned, Sydney is going to lose business to the other states.”
The lack of land supply is driving significant appreciation in land values according to CBRE, with 25% year-on-year growth recorded for 1.6-hectare lots over the past three years.”
“In comparison to some other major offshore markets, Australia’s share of floorspace under construction to total space is one of the lowest globally,” said CBRE’s head of industrial and logistics research Sass J-Baleh.
“Given the increase in Australia’s migration program planning, we estimate an additional circa 800,000 people will be living in Sydney between now and 2031. The forecast population growth is expected to create demand for around 3.6 million sqm of industrial and logistics floor space over this period.”
