Rise in Imports Opens Space Age
3 November 2011
Investors in industrial property are directing cash to the NSW sector due to a rise in demand for distribution centres from the increased flow of imports.
The demand for space extends to Canberra, where Lang Walker's Walker Corp has signed Allied Pickfords to its newly completed facility at a Canberra industrial estate, Monaro Industrial Park in Hume.
Allied Pickfords relocated its business from Queanbeyan to the new industrial park.
The lease deal was signed amid survey of 42 industrial investors that control almost 750 industrial assets across Australia which found their choice of investment location remains strongly in favour of Sydney and Melbourne.
According to Jones Lang LaSalle's inaugural Industrial Investor Survey, conducted during May and June, investors were asked to nominate their single most preferred location for investment where they see the greatest opportunity.
Jones Lang LaSalle's Australian head of industrial, Michael Fenton, said the survey found 76 per cent of investors who responded were certain or likely to invest I Australia's industrial property sector over the next 18 months.
"Of the respondents certain or likely to invest, more than half [61 per cent] indicated they were currently focused on investing in prime-grade assets and 39 per cent on secondary-grade assets," Mr Fenton said.
"Half the investors reported they were seeking warehouse and distribution facilities at present, which is borne out in figures showing increasing import volumes into Australian ports over the past 18 months. The survey also confirmed what we have been witnessing regarding the investment criteria being used by industrial investors."
Mr Fenton said most respondents [45 per cent] were seeking a passive investment with a focus on long leases [weighted average lease expiry], strong tenant covenants and income profile of the asset and yield.
Jones Lang LaSalle's director of national industrial research, Nick Crothers, said new industrial supply was expected to gradually increase over the next few years.
This would follow a changing focus by industrial investors towards active asset management and strategies to increase development earnings.
"New supply in 2010 was the lowest level in over 10 yeas. At this stage, we are expecting supply to be slightly higher in 2011. In the second quarter of this year, 163,300 square metres of new supply was completed, with a further 759,900 square metres under construction and due in the second half of 2011," he said.
"More speculative development projects are likely to move into the construction phase due to the low supply environment and as demand conditions improve."
For more information about Walker Corporation, visit www.walkercorp.com.au.