Web retail means warehouses
THE RISE and rise in online shopping will be the backbone of growth within the industrial property markets, according to agents, brokers and land owners.
In the reporting season for the first half of the 2013 financial year, brokers have forecast real estate investment trusts with a weighting to the industrial sector will fare better than those reliant on retail.
That's a reverse prediction from the same time two years ago.
In a report on the results season, John Kim, the head of Australia property research at CLSA Asia-Pacific markets, says that for industrial landlord Goodman, he expects 2013 to be another big year, with solid demand from pension and sovereign funds and the ability to sell assets from its strong development pipeline into new and existing funds.
''We think that industrial warehouse asset values are mispriced relative to office and retail,'' he said.
''Given the headwinds in office and retail, industrial looks strong, with healthy demand and prime rents at pre-GFC levels.
''Additionally, capital values are at four-year highs [$1261 a square metre] and industrial development is subdued.''
The positive outlook is also boosted with speculation that the giant Amazon group still has Australia on its agenda when it can find the appropriate site.
The NSW managing director at Jones Lang LaSalle, Michael Fenton, said he believed Sydney's industrial prices were set to strengthen in 2013 off the back of low supply, with office leasing predicted to make a slow recovery.
In the industrial sector, organic growth and obsolescence of older buildings are set to drive occupiers to seek efficiencies from modern accommodation.
''At this stage, supply looks likely to remain below average for another 18 months at least,'' Mr Fenton said. ''The market fundamentals of steady demand and below-average supply are supportive of low market vacancy and rising rents for existing stock.''
Mr Fenton said that the key drivers of pricing in the industrial sector had been the cost of capital and yield spreads relative to other property sectors.
The NSW divisional director industrial at Savills, Darren Curry, said pre-commitments were driving the industrial leasing market at present and would continue to have a positive effect on future developments. ''On the sales front, Savills recorded $1.25 billion worth of industrial property transactions in 2012, up from $1.06 billion in the previous year,'' Mr Curry said.
Major pre-commitment activity is powering Sydney's industrial property market and is forecast to continue to drive new construction, according to Savills.
Savills' latest Spotlight Sydney Industrial research report shows a total of 866,560 square metres of industrial property was leased in Sydney in 2012.
This is up 40 per cent on the previous 12 months (618,197 square metres).
The NSW divisional director of research at Savills, Simon Hemphill, said that in the year to December 2012, the private-investor sector purchased more than $132 million of industrial property valued at greater than $5 million.