Perth Commercial and Industrial Market Update – March 2020

February 24, 2020

The second half 2019 has proven to be a positive period in the West Australian industrial sector. The extended periods of dormancy appear to be at an end with an increased level of market activity and enquiry continuing into the start of 2020.

The emergence of owner-occupiers in the capital transaction markets has been a noticed change from previous years. Owner occupiers are now seeing value opportunities to purchase high quality and well located industrial facilities. Older buildings and those in industrial suburbs located further afield to the Perth Airport and Fremantle Port continue to experience extended periods of vacancy and time on market.

The leasing market has seen an increase in transactions, particularly for modern facilities in the eastern industrial suburbs. We expect this trend to continue into 2020 with stock for well designed, functional facilities continue to tighten. Incentives, normally in the form of a rent free period are still offered, however they have reduced in length and are now typically offered to assist tenants transition into their new property.

The investment market remains strong for tenanted properties due to the low interest rates currently on offer. The lack of supply of quality investments with strong Lessee covenants and terms beyond 4 years means they experience a shorter time on market. We expect this demand to continue throughout 2020. MLV is quietly confident that the worst of the challenging times are behind Western Australia and the sentiment amongst the industries that drive the commercial and industrial markets is that this will be a far more prosperous year.

Rory Feely
MLV Real Estate