The Australian industrial logistics market remains a key focus for investors, with the outlook for the sector remaining relatively positive, according to the Colliers Industrial Investment Survey.
Colliers’ survey results found that 89% of Australian industrial investors favoured the logistics sector over other commercial sectors, with 43% of investors intending to acquire their next industrial asset within the next six months.
The Industrial Investment survey also found that just 15% intend to divest their assets over the same period, highlighting that the mismatch between supply and demand will remain.
“Despite recent market uncertainty, 89% of investors surveyed expect the market to stabilise in around 12 months,” said Malcom Tyson, Managing Director, Industrial at Colliers.
“In the interim, just over half of investors (54%) believe capital values will fall by up to 10%, with 64% are expecting cap rates to soften by up to 50 basis points.”
“Sydney and Melbourne remain the focus cities for investors with almost 60% of investors saying they are very likely/likely to invest in these capital cities within the next 12 months.”
The survey found that almost 78% of investors see tenant solvency and the re-pricing of assets as the biggest challenge facing investors amid the current health crisis.
The positive sentiment was also echoed by industrial occupiers; Colliers found that 21% of occupiers surveyed reported minimal impact on their business as a result of COVID-19, with nearly three quarters already having a risk management plan in place.
“Occupiers remain optimistic about current trading conditions with 53% expecting their volume of business to be better off or the same as it is now over the next three months,” said Luke Crawford, Associate Director, Research at Colliers.
“Similarly, 75% expect their workforce to remain the same or grow over the next 24 months. To achieve efficiencies and better respond to the impacts of COVID-19 on their business, 85% of occupiers have reviewed their supply chain network, while 30% plan to relocate to a bigger warehouse over the next year.”
The survey found that the biggest impact of COVID-19 on industrial occupiers has stemmed from revenue loss, increased cost of doing business and idle capacity which collectively impacted 55% of businesses.