Positive outlook for Adelaide industrial

April 24, 2012 | Industrial | About Colliers International | Research | Commercial

Transactional activity in Adelaide’s industrial market is gaining momentum following an improvement in investor sentiment, according to Colliers International latest report, Adelaide Industrial Research & Forecast Report, First Half 2012.

"While there has been some nervousness to act, purchasers and vendors are starting to make decisions again and activity is imminent,” says Andrew Gerlach, Director of Industrial at Colliers International.

“The shortage of prime quality investment stock did hamper major investment activity for most of 2011 however a number of significant assets were brought to the market in the last quarter [including Centro’s Metcash property and GWA Group Caroma’s].

“Although these remain in negotiation, this activity should boost results from mid-2012 as details of the transactions emerge.”

“The second half of 2012, moving into 2013 should counter the lack of major activity over the last 18 months,” he said.

“Interestingly, the total dollar amount of sales in 2011 was still similar to 2010 [circa $233 million compared to $230 million in 2010], with the sub $3 million market remaining buoyant, underpinned by private investor and owner occupier buys.”  

“What happened globally really hasn’t had any major impacts to the bottom line of businesses in Adelaide as evidenced in the large format industrial building market,” says Mr Gerlach.

“More than half of all leasing transactions in 2011 were in this segment and involved businesses such as Nick Scali, Schweppes Australia, Allied Pickfords, Rocla and Coca-Cola Amatil, all being secured on long term leases for major facilities in either a design and construct option or refurbished existing stock.”  

He says this activity has escalated in recent years; in 2010, this activity accounted for around 35 per cent of all leasing transactions.

“This is a trend which will continue over the medium term, particularly as private and corporate developers continue to increase their interests in the sector.

“In addition, the shortage of prime quality stock in the core areas will continue to drive an increase in brownfield development and the redevelopment of older style buildings.”

The report found that more than 200,000sq m was leased in 2011.

Mr Gerlach said leasing transactional activity for first quarter of 2012 is already above the same time last year and this trend should continue.

“While net face rents have remained relatively stable during the last six months, the increasing level of activity and continued demand for Prime grade facilities should underpin some rental growth during the third and fourth quarters of 2012.

“Growth should return to values at this time and Prime yields may start to compress slightly,” he said.

 

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