Sydney’s Market Update June 2019

June 27, 2019

Following a very strong start to 2019 with high enquiry levels, demand has now slowed.

Whilst supply of industrial property has been very low over the last 12 months, several factors have combined to disrupt the marketplace. The NSW government elections in March, Anzac Day and Easter holidays in April, the Federal election in May and the EOFY have all led to decreased enquiry levels, as organisations assess the political landscape and its impact on their business, clients and customers.

Despite this, we expect the market to gather itself and the second half of 2019 to remain strong. The demand is underpinned by the continuing structural shift in our marketplace, due to the development of online shopping platforms, infrastructure projects and continued merger and acquisition activity that will result in real estate transactions.

From an owner-occupier perspective, demand continues to exceed supply across all size ranges – albeit tempered by tighter lending criteria. Investor demand across all price points also continues to exceed supply, and leasing demand is generally in equilibrium with supply for reasons mentioned above. As demand for industrial property gathers pace in Q3, we expect further upward pressure on rentals and a reduction in incentives for all existing buildings for lease. Only properties above 15,000m² will increase the rate of growth in rents to be tempered, due to the additional competition in the shape of the pre-lease market. In summary, notwithstanding the current lull in demand, the industrial market will prove to be an active one as we move toward Q3 and into the back end of 2019.

Matthew Herrett

Link Property Services