2024-10-08-莱坊-Sydney_Industrial_Precincts_Report_Q2_2024_7页_921kb

Sydney Industrial Market Q2 2024 Summary

Core Content Overview

This report provides a quarterly update on the Sydney industrial market, focusing on investment activity, leasing trends, vacancy rates, rent levels, and yield performance across different industrial precincts. It highlights the role of institutional investors and the impact of new supply on market dynamics.

Investment Activity

• Total Investment Volume: In Q2 2024, 28 assets were traded, totaling $939 million, with the half-year transaction turnover reaching $1.4 billion.
• Investment Drivers: Institutional investors are actively acquiring assets in sought-after locations, contributing to the recovery in investment activity.
• Key Transactions:
  • Goodman acquired 28-40 Lord St, Botany for $170 million.
  • Goodman acquired 247 King St, Mascot for $75 million.
  • Arrow Capital purchased 7-15 Gundah Rd, Mt Kuring-gai for $102 million.
  • Blackstone acquired 133 Vanessa St, Kingsgrove for $55.8 million.
  • Bachechi Bros. Realty Inc acquired 275 Kurrajong Rd, Prestons for $40 million.
• Yield Trends:
  • Super Prime Yield: 5.25%, stable q/q, up by 50 bps y/y.
  • Prime Yield: 5.46%, stable q/q, up by 39 bps y/y.
  • Secondary Yield: 6.38%, stable q/q, up by 62 bps y/y.
• Yield Stabilisation: Yields are expected to remain stable for the remainder of 2024.

Outer West

• Leasing Take-up: 47,000 sqm in Q2, a 27% decrease from the 5-year average.
• Vacancy: Increased by 17% q/q to 118,000 sqm, representing 47% of overall Sydney vacancy.
• Rent Levels:
  • Prime Net Face Rent: $203/sqm, stable q/q, up by 2.5% y/y.
  • Secondary Net Face Rent: $168/sqm.
• Incentives:
  • Prime Incentive: 11.6%, stable q/q, up by 200 bps y/y.
  • Secondary Incentive: 12.0%, stable q/q.
• New Supply:
  • Expected to reach 619,356 sqm in 2024.
  • 42% of new supply completed in H1 2024.
• Yields:
  • Prime Yield: 5.50%, stable q/q, up by 45 bps y/y.
  • Secondary Yield: 6.45%, stable q/q.

South West

• Leasing Take-up: 44,000 sqm in Q2, 74% above the 3-year average.
• Vacancy: 83,000 sqm, stable q/q, 59% below 3-year average.
• Rent Levels:
  • Prime Net Face Rent: $190/sqm, stable q/q, up by 2.7% y/y.
  • Secondary Net Face Rent: $115/sqm.
• Incentives:
  • Prime Incentive: 11.6%, stable q/q.
  • Secondary Incentive: 12.0%, stable q/q.
• New Supply:
  • Expected to reach 113,000 sqm in 2024.
  • 63% completed in H1 2024.
• Yields:
  • Prime Yield: 5.65%, stable q/q, up by 60 bps y/y.
  • Secondary Yield: 6.38%, stable q/q.

Inner West

• Leasing Take-up: 43,672 sqm in Q2, well above the 3-year average of 25,000 sqm.
• Vacancy: 14,000 sqm, stable q/q, 59% below 3-year average.
• Rent Levels:
  • Prime Net Face Rent: $214/sqm, stable q/q, up by 4.9% y/y.
  • Secondary Net Face Rent: $176/sqm.
• Incentives:
  • Prime Incentive: 8.3%, stable q/q, stable y/y.
  • Secondary Incentive: 8%, stable q/q.
• New Supply:
  • Expected to reach 70,000 sqm in 2024.
  • 25% lower than 2023.
• Yields:
  • Prime Yield: 5.25%, stable q/q, up by 25 bps y/y.
  • Secondary Yield: 6.22%, stable q/q.

South

• Leasing Take-up: 12,000 sqm in Q2, 65% above the 5-year average.
• Vacancy: Increased by 22% q/q to 34,000 sqm, the highest vacancy level in three years.
• Rent Levels:
  • Prime Net Face Rent: $328/sqm, stable q/q, up by 5.6% y/y.
  • Secondary Net Face Rent: $268/sqm.
• Incentives:
  • Prime Incentive: 5.0%, stable q/q, stable y/y.
  • Secondary Incentive: 8%, stable q/q.
• New Supply:
  • Expected to reach 65,407 sqm in 2024.
  • 15% completed in H1 2024.
• Yields:
  • Prime Yield: 4.88%, stable q/q, up by 24 bps y/y.
  • Secondary Yield: 5.88%, stable q/q.

Key Trends Across All Precincts

• Investment Activity: Improved transaction volumes driven by institutional investors.
• Vacancy: Overall vacancy in Sydney increased to 118,000 sqm, with significant rises in the South and Outer West.
• Leasing Take-up: Varies by precinct, with some areas showing strong absorption and others experiencing a decline.
• Rents: Prime net face rents remain stable, with some areas showing modest year-on-year increases.
• Incentives: Incentives for both prime and secondary grades are stable, with some showing year-on-year improvements.
• New Supply: Significant new supply is expected across all precincts, with most developments completed in H1 2024.

Definitions

• Prime Grade: Assets with modern design, good condition, and utility, including an office component of 10-30%.
• Secondary Grade: Assets with older design, in reasonable or poor condition, inferior to prime stock, with an office component of 10-20%.
• Take-up: Absorption of existing assets, speculative developments, or pre-commitments.
• Vacancy Methodology:
  • Existing Buildings: Assets available for lease.
  • Speculative Buildings: Assets constructed speculatively and vacant despite practical completion.
  • Spec. Under Construction: Assets under construction for speculative purposes, to be available within 12 months.

Contact Information

• Research & Consulting: Ben Burston, +612 9036 6756, ben.burston@au.knightfrank.com
• Industrial Logistics, NSW: Orlando Maciel, +612 9036 6728, orlando.maciel@au.knightfrank.com
• Research & Consulting: Marco Mascitelli, +612 9036 6656, marco.mascitelli@au.knightfrank.com
• Industrial Logistics, Investments: Angus Klem, +612 9028 1110, angus.klem@au.knightfrank.com
• Research & Consulting: Naki Dai, +612 9036 6673, naki.dai@au.knightfrank.com
• Valuation & Advisory, NSW: Jack Needham, +612 9036 6663, jack.needham@au.knightfrank.com