Industrial landlords call the shots in Sydney’s West
With a backdrop of less than 1.5% vacancy rates, continued yield compression to below 5% and minimal developable land left, Sydney’s West industrial market continues to experience upward trends and set record growth rates for both capital values and rents.
“Capital values of industrial properties have increased by an average of 18% over the past 12 months and are now averaging out at $3,285psm for properties below 5,000m²,” said Kellie Tattersall, Director, Industrial at Colliers Intentional.
“Similarly, buildings above 5,000m² have increased by 11% and are averaging out at $2,180psqm. This places more pressure on investors to accept sharper yields and move up the risk curve.”
In todays market it appears to be cheaper to own and operate out of your own premises, with residual enquiry sitting at 75%. Combining all the influencing points together, Landlords have secured the driving seat to direct their ideal leasing terms.
“A few emerging trends that Colliers are seeing are demolitions clauses, no option periods and minimal lease terms of 5 years” said Kellie Tattersall. “These trends provide owners with long term security on their investment with maximum flexibility.”
Key drivers for this growth and increased demand is the infrastructure projects including the Westconnex, Parramatta Light Rail and the Sydney Metro West line, that are underway and due for completion in 2023.
“Once these projects are complete, the Western Sydney’s Industrial lands will connect people to jobs plus goods to the wider Sydney consumer quicker than any other industrial area in NSW and concreting the appeal to own industrial property in the West,” said Kellie Tattersall.