Perth Industrial Market – May 2017

  • The contraction in the resources sector continues to negatively impact the WA economy and Industrial properties in Perth, with the market characterised by increasing vacancies, declining rents and constrained land supply.
  • Rents have softened in all sectors of the market over the last three years, with falls of between 20% and 30% evident. Further falls are expected over the next year or two.
  • Incentives in all sectors of the market have increased marginally over the past year, although in general owners of industrial properties in Western Australia are more willing to accept lower rents rather than offer higher incentives.
Perth Rental Indicators - March 2017 quarter
Net Face rents ($/m2) Incentives (%)
Prime Secondary Prime Secondary
Inner North 110 – 130 75 – 115 5 – 10 5 – 15
Outer North 75 – 95 65 – 85 10 – 15 10 – 15
Inner South 95 – 115 75 – 95 5 – 10 5 – 15
Outer South 75 – 95 65 – 85 10 – 15 10 – 15
Inner East 90 – 110 75 – 90 5 – 10 5 – 15
Outer East 70 – 95 65 – 90 10 – 15 10 – 15

Source: ABS, PVA(WA) Research

  • Yields have stabilised or firmed slightly throughout the past two years on the back of higher vacancies, increasing incentives and generally subdued market conditions. However, the divergence between prime and secondary markets remains, based on the primary market drivers of quality, location, and lease covenant.
Perth Industrial Market Yields (%) - March 2017 Quarter
Prime Secondary
Inner North 110 – 130 75 – 115
Outer North 75 – 95 65 – 85
Inner South 95 – 115 75 – 95
Outer South 75 – 95 65 – 85
Inner East 90 – 110 75 – 90
Outer East 70 – 95 65 – 90

Source: ABS, PVA(WA) Research

  • We expect yields to remain stable for the remainder of 2017.
  • There are a number of metropolitan infrastructure and development projects underway or proposed in the Perth area which are likely to continue to support the industrial market, such as Forrestfield Airport Link; and Northlink WA. Completion of the Northlink WA project is expected in 2019, opening up a new industrial precinct in the Bullsbrook area which will support the transport industry, particularly related to the north-west mining, oil and gas markets.
  • Work on the Perth Freight Link (Roe 8) has been suspended following the election of the Labour Government in March 2017. $1.2 billion of Federal funding previously allocated to this project will be redirected to the Perth Freight Link and to an extension of the Joondalup train line to Yanchep.

For further details please contact:

Gavin Chapman - Managing Director
gavin.chapman@pvawa.com.au
(08) 6500 3600

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