APPD Market Report Article

Adelaide

August 26, 2022

Annabel McFarlane, Senior Director - Research, Australia

17.4%

AUD 105

Rents
Rising

Occupier demand rebounds in 2Q22

  • Leasing activity has accelerated over the quarter. Gross take-up volumes have increased by 82.2%.
  • There were five major occupier moves (>3,000 sqm) recorded, totalling 34,600 sqm.

Average prime rents increase as demand outpaces supply

  • There were three completions recorded over the quarter, totalling 26,200 sqm.
  • An additional 49,480 sqm of industrial supply is currently under construction and expected to complete in 2022.

Scarcity of opportunity limits transaction volumes in 2Q22

  • Average prime existing rents increased between 1.2% and 4.4% q-o-q across most precincts.
  • Prime midpoint yields in all precincts were unchanged in the quarter. There were two major transactions recorded over the quarter, totalling AUD 39.0 million.

Outlook: Adelaide industrial yields have now reached a cyclical low

  • Occupier demand continues to outpace supply. However, business confidence is expected to be negatively impacted by the current economic environment, which may result in a pause in expansionary industrial activity over the balance of 2022.
  • Investment demand is expected to slow as monetary policy tightens and cost of debt increases. However, the defensive investment characteristics presented in well-leased, modern facilities are still likely to be attractive in the short term.

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

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