This article is from the Australian Property Journal archive
THE transition to green is driving the latest era of growth in Australia’s industrial property sector, as the last five years records $33.3 billion in warehousing investment.
According to a new report by Savills, increased adoption of renewable energy, advanced manufacturing, and electric vehicle (EV) technologies is directly underpinning demand for industrial space across the country.
Over the five-year period, there has been an increase in the value of private sector factories and other secondary industry jobs, totalling circa $8.2 billion since 2019, coinciding with increased commercial activity.
“While industrial demand has historically been driven by warehousing and logistics, manufacturing is poised to see a greater focus going forward,” said Katy Dean, head of research at Savills Australia.
“With a strong policy framework and increasing investor interest, this rebound is poised to reshape Australia’s industrial property market for years to come.”
More than 10,000,000sqm of new industrial floorspace was added to East Coast markets since 2019, even with constrained commencements expected over 2024.
In 2023, industrial investments globally declined by 39%, with a 53% drop in office and 56% in residential sectors.
Comparatively the sector was resilient in Australia, with investment volumes down by 35% in 2023 but 56% higher than the pre-pandemic five-year average.
“Following an unprecedented three-year growth period, marked by face rents soaring up to 80% in select markets and vacancy rates at below 1%, there has been a significant surge in capital-seeking investment opportunities in the industrial sector,” said Michael Wall, national head of industrial & logistics at Savills Australia.
Investor demand is forecast to remain strong with the country’s expanding population, infrastructure development, net-zero targets and increased demand for technology such as e-commerce, AI, cyber security and data storage.
Government policy is supporting a manufacturing rebound in Australia, with Victoria, South Australia and Queensland leading the charge, with 10-year roadmaps to improve their manufacturing capabilities.
Seen in the Victorian Government’s sale of the bulk of the former CSL manufacturing site to Zoetis for $350 million, with the deal incorporating sovereign manufacturing capabilities.
While in South Australia, construction is now underway on a $100 million facility for Noumed Pharmaceuticals, which will receive up to $20 million in funding from the Federal Government.
