Industrial vacancies at record low

• Net absorption of 4000sqm-plus industrial assets was over 1,733,000sqm
• Sydney has the lowest vacancy rate at 1.4%, with Melbourne at 1.54%
• Industrial assets have truly recovered from 2020 , said CBRE

Industrial vacancies across Australia has fallen to a historic low of 2.24%, as occupiers continue to take up space equal to inner-city suburbs such as Carlton or Glebe.

Between Q4 2020 and Q1 2021, the net absorption of 4000sqm-plus industrial assets in Sydney, Melbourne, Brisbane and Perth was over 1,733,000sqm. This figure combines both changes in total stock levels and vacant space, which has been calculated for the first time by CBRE’s industrial and Logisitcs teams for the 2021 Industrial Vacancy Report.

2.24% is the total vacancy rate across the five major Australian cities, which represents a fall from 2.95% as recorded back in Q2 2020.

Individually, Sydney has the lowest vacancy rate at 1.4%, which was halved following net absorption of 738,325sqm. Melbourne’s vacancy rate has fallen by 1% to 1.54% thanks to net absorption of 653,365sqm.

Sass J-Baleh, CBRE’s Head of Industrial and Logistics Research, said the report reflects rising demand for industrial and logistics space, which she said is underpinned by stable, long-term factors.

“That includes the structural shift to online retail and its role in creating greater activity among logistics and transport operators, the rise in the need for data centres, and the growth in the non-discretionary retail sector, which supports the expansion of food manufacturing and logistic operators, as well as the demand for cold storage space,” she said.

“More than 60% of the supply expected to be delivered in 2021 and 2022 has already been pre-committed, and therefore we expect vacancy rates to remain relatively low over the next 18 months.”

Sass J-Baleh, CBRE

Industrial Vacancy Rate 

Source: CBRE

Cameron Grier, Pacific Regional Director of CBRE Industrial and Logistics, added that the market has vigorously bounced back following the pandemic-related challenges of 2020.

“In 20 years, I have not witnessed such vast volumes of leasing enquiry. This has not been restricted to the major east coast markets, either, with South Australia and Western Australia also experiencing record leasing demand,” he said.

“(E-commerce) coupled with the fundamental rethink of how occupiers deal with inventory levels, has created considerable momentum in the industrial and logistics sector in 2021.

“From an occupier’s point of view, the expected tightening of vacancy across all markets means that they now need to start thinking about their moves much earlier to ensure the continuity of their supply chains.”

Cameron Grier, CBRE