Sydney Industrial landscape
Sydney Industrial landscape. Photo – Canva.
  • Sydney saw stable prime net face rents for the first quarter of 2021
  • Stock vacancies in Melbourne are at historic lows below 2%
  • Prime net face rents across Brisbane were largely unchanged

Sydney saw stable prime net face rents for the first quarter of 2021 and relatively low transaction volume, according to Cushman and Wakefield’s latest Industrial MarketBeat Report.

Meanwhile, vacancies in Melbourne for existing and speculatively built stock is at historic lows below 2%.

Despite the increase in new supply, prime net face rents across Brisbane were largely unchanged over the past six months.

Q4 2020 was also the largest quarter on record for industrial transactions, with $533 million of transactions.

Sydney

Sydney recorded an average rate per sqm (>2,000sqm) in Q1 of $4,410, and an average prime yield of 4.8%.

The average prime net face rent (2,000-5,000sqm) is $155 per sqm, which remained largely unchanged over the past six months.

Incentives were also generally unchanged, averaging 10%. NSW industrial transaction volume was relatively low during Q1, at $114 million, down from $289 million in Q4 2020 and the record quarterly total of $773 million in Q3 2020.

Quarterly Investment Volume, (>$5M) – Sydney

Sydney Industrial
Source: Cushman & Wakefield Research; RCA

Melbourne

In Melbourne, leasing activity has been very strong for the past two years. The average prime net face rent in the West was recorded at $90 per sqm (>5,000sqm), while the average prime yield for the same market was 4.5%.

A shortage of “existing and speculatively built stock” is putting upward pressure on land prices, according to the Q1 Report. This could translate into stronger rental growth in the coming years.

In the year to March 2021, Melbourne industrial rolling annual sales recorded a volume of $2.9 billion, and a record $1.35 billion was traded in the December 2020 quarter alone.

Investment yields remain firm and may fall further with the prospect of rental growth increasing investor appetite, said the report.

Rolling Annual Industrial Investment Volume (>$5M) – Melbourne

Melbourne Industrial
Source: Cushman & Wakefield Research; RCA

Brisbane

In Brisbane, there was an 8% year on year increase for vacant land below 10,000 sqm. The average prime net face rent (>4,000sqm) was $120 per sqm with an average prime yield of 6.4%.

Despite an uplift in transactions, and some new supply through 2020, prime net face rents across Brisbane were largely unchanged over the past six months.

Q4 2020 rounded off a record year for Brisbane’s industrial market, recording $533 million worth of transactions and the largest quarter on record.

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