Sydney Commercial & Industrial Market Update – October 2019

September 23, 2019

The Sydney industrial market has continued its run of strength, with activity levels remaining high. Demand from owner occupiers to purchase industrial property continues to outstrip supply, resulting in continued pressure on pricing.

Sydney’s outer west and south west markets remain hot spots, fuelled by the increasing activity surrounding the developing Aerotropolis precinct. Leasing activity sub 5000sqm remains very strong, with lease transactions struck at record setting rates across Sydney and with sub 5pc incentive levels. Between 5-10,000sqm and the level of supply increases, relieving some of the pressure on pricing and incentives, however it remains a landlords market.

Above 10 -12,000sqm and the level of supply increases again, with additional competition from the pre-lease market combining with existing building stock to restore the imbalance between supply and demand. Much of the demand we are experiencing above 10,000sqm is a result of merger and acquisition activity, possibly pointing to companies seeking scale, efficiencies and economies in the face of potentially tightening trading conditions across the global market.

Whilst some pundits predict a slow down on the back of the caution being displayed in some sectors, the fight for competitive advantage is driving companies to re-assess their real estate footprint and look for more functional industrial properties to better service their business models in to the future.

Matthew Herrett – Link Property Services