“Developers are simply not able to bring on space swiftly enough,” Cameron Grier, CBRE Regional Director, Industrial and Logistics, Pacific said.
  • CBRE Research’s Q3 2022 Industrial & Logistics Figures report has been released
  • Industrial and Logistics space is now predicted to fall 600,000 sqm short of the previous 2022 predictions
  • Q3 was another quarter of record-breaking rental growth in Australia’s industrial and logistics market

The new supply of Industrial and Logistics space is now predicted to fall 600,000 sqm short of the previous predictions for 2022 as construction delays and rising costs push out the pipeline.

Across the five major cities, the pipeline outlook for the year has been downgraded from 2,700,000sqm to 2,100,000sqm according to CBRE Research’s Q3 2022 Industrial & Logistics Figures report.

While the overall pipeline for 2022 has been downgraded, a total 654,000sqm of new supply did enter the market in Q3. This influx brings the year-to-date figure to 1,400,000sqm, not a far reach from the long-term average of 1,500,000sqm.

The same challenges and holds faced across the construction industry have delayed some industrial and logisitcs projects by up to one year, with some cancelled altogether.

CBRE Regional Director Cameron Grier, explains that the delays stem from long waits for planning approvals in some states and construction delays caused by wet weather and labour shortages.

The industry is also faced with rising costs based on material shortages and supply-chain disruptions.

“Developers are simply not able to bring on space swiftly enough. For some projects, this is adding up to delays of six-to-12 months.”

Cameron Grier, CBRE Regional Director, Industrial & Logistics, Pacific

The national industrial and logistics vacancy rate in Australia sits at a world-low of 0.8% according to CBRE Research. Sydney’s ranks the the lowest in the country at with a vacancy rate of 0.3% while Brisbane is the highest at 1.4%

Upwards pressure on rents

“Occupier demand continues to outstrip supply in most capital cities,” Mr Grier said.

“Coupled with the lack of supply being brought to market, when you overlay some 40% increase year-on-year in construction costs and softening cap rates, it’s putting even further upward pressure on rents to hit the new return hurdles of investors.”

Sydney and Perth have recorded the largest 2022 rises to date, 29.6% and 24.3% y-o-y for super-prime assets, with Perth’s Q3 rise of 9.3% the nation’s biggest.

CBRE’s Head of Industrial & Logistics Research Australia, Sass J-Baleh, explained that to bring the Australian market to a state of equilibrium, where demand meets supply, around 3.7 million sqm of space is required.

Right now only 2.5 million sqm is under construction.

“Q3 was another quarter of record-breaking rental growth in Australia’s industrial and logistics market.” 

Sass J-Baleh, CBRE’s Head of Industrial & Logistics Research Australia

“Therefore, we can expect strong real rent growth to continue over the next three years, averaging at just over 6% per annum,” Ms J-Baleh said.



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