- 4.2 million sqm of floorspace was absorbed across the industrial and logistics space
- The $16B is more than double the previous record
- Much of this boom driven by e-commerce, accounting for 19% of I&L space
Property investors acquired just under $16 billion worth of income-generating industrial and logistics assets in Australia in 2021, marking a new annual record according to CBRE Research.
Owner occupiers were also as active in the industrial and logistics space with about 4,200,000sqm of floorspace absorbed in the year, up significantly from 2020.
Movement in the sector drove the national vacancy rate to a new record low of 1.3%.
“Demand from investors and occupiers alike drove Australia’s industrial and logistics sector to new heights in 2021, with records smashed on a host of key metrics,”
Sass J-Baleh, CBRE’s Head of Industrial & Logistics Research Australia, said.
“Given investment sale transaction volumes had only ever surpassed $5 billion three times before, and peaked at $7.2 billion, the result of $16 billion in 2021 is ground-breaking and demonstrates the strong demand for Australian industrial and logistics assets from local, regional and global investors.
“Institutional investment appetite continues to favour I&L due to high quality covenants in those institutional-grade assets and confidence in the ability to collect income, with multiple domestic and offshore capital sources competing to elevate capital allocation to the strongest performing sector.”
Ms J-Baleh noted the national average vacancy rate has been on the decline over the past three years, now hitting a record low.
She expects vacancies to remains stable this year with leasing transactions remaining in line with or below the long term average due to supply constraints.
E-commerce boom continues
The data confirmed that as the e-commerce penetration rate continues to rise – accounting for 14.3% of total spending – groups involved in e-commerce accounted for 19% of the total I&L space, about 800,00sqm across 2021.
“Lockdowns in the second half of 2021 continued to accelerate the major growth trends for industrial and logistics, as more consumers took their shopping online,” Ms J-Baleh added.
“The transport, postal and warehousing sector finished 2021 as the most-active sector, followed by wholesale and retail traders, that cross-section accounting for 69% of the Q4 leasing activity.”
Average net face rents increased significantly, with midpoint yields contracting across the five major cities. Perth recorded a 5.6% rental increase with 115bps yield fall on a year-on-year basis.
Across Australia, the midpoint super prim yields now site at 4.5%, with a 56bps compressions recorded across the year.
We expect rents to grow at an ever stronger rate in 2022, in excess of 5% y-o-y,” Ms J-Baleh concluded.
