APPD Market Report Article

Perth

May 26, 2024

Annabel McFarlane, Head of Strategic Research, Australia

0.0%

AUD 140

Growth
Slowing

Strong rebound in quarterly occupier activity

  • Occupier demand in the Perth market increased over Q1 2024, with 77,700 sqm of gross take-up recorded across 10 major occupier moves (≥3,000 sqm). Activity recorded in the quarter was above the two-year quarterly average of 53,668 sqm.
  • There was 257,200 sqm of gross take-up recorded in Perth over the last 12 months, above the 10-year average of 189,100 sqm. Demand was led by the Transport, Postal & Warehousing (34.0%), Manufacturing (14.0%) and Retail Trade (13.0%) sectors.

Future supply pipeline remains elevated

  • Two major developments (≥3,000 sqm) reached completion in Q1 2024, totalling 40,100 sqm. There are 11 projects totalling 91,000 sqm currently under construction, expected to be completed by Q3 2024.
  • The potential future supply pipeline has seen a significant uplift with 14 projects in the plans approved or plans submitted stages totalling 182,700 sqm. A significant proportion (95.6%) of these projects are currently without tenant pre-commitment.

Rents stable across all Perth industrial precincts

  • Average prime existing net rents were unchanged across all three precincts in Q1 2024; the fifth consecutive quarter rents were stable. Rents were also unchanged on an annual basis across all three precincts.
  • The recent stability observed in the cost-of-debt environment has led to stable prime industrial and logistics yields. However, on an annual basis, yields recorded a softening of 75 basis points across all three precincts.

Outlook: Rental growth is expected to remain positive

  • Rental growth is expected to remain positive over the short to medium term, driven by strong ongoing occupier demand and scarcity in supply.
  • The industrial and logistics investment landscape will largely depend on broader market sentiment regarding interest rates. The current stability in the cost-of-debt environment is likely to instill improved investor confidence.

Note: Perth Logistics & Industrial refers to Perth's industrial market (all grades).

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