THE PROPERTY DEVELOPMENT REVIEW
global view on the strength of the Australian industrial market. We note that securing capital remains a dynamic space and one which Knight Frank is well placed to keep our finger on the pulse given our Global presence across all key markets. What has the investment/divestment approach been from some of the bigger players like Goodman, Dexus, Charter Hall, Centuria and have there been any new entrants with aggressive acquisition plans? All of the usual suspects are still seeking investment opportunities, with limited movement in the divestment space. The market has been dominated by the core groups but there are a number new entrants starting to make some noise with new overseas capital behind them. As industrial land sites with scale are few and far between, funds have had to proactively seek value add opportunities within core markets where they can take advantage of low site cover properties and short WALE assets where they can get their hands dirty on improvements to add rental growth and income. Are pre-lease transactions accelerating industrial supply and how have increased building costs impacted new supply coming to market? There has not been a significant number of pre lease transactions over the last 12 months. Increased building costs have certainly had an impact on the spec market, with a number of projects put on hold around the country. Spec activity in the 10 000sqm plus category has remained solid due to the large number of logistics Tenants seeking larger space, however the below 3000sqm category has ground to a halt in many markets. This has been driven more by uncertainty around building costs than a lack of available sites. What have been some of the more significant industrial transactions in 2023? The largest transaction in 2023 involved UniSuper acquiring a 50 per stake in an industrial property portfolio made up of prime assets in Sydney and Melbourne in a $560 million deal. Other major deals include Gateway Capital purchasing Access Corporate Park for $300M whilst we have seen other portfolios sell via piecemeal basis to several different purchasers. Whilst sales aren’t at the rate of previous years, the sector continues to be strongly sought after with repricing allowing new entrants and privates to become major purchasers. Knight Frank has remained active throughout 2023 with multiple deals across the country particularly in the $15-$60M space. What types of industrial assets are in most demand from a) owner-occupiers and b) investors? Owner occupiers are actively seeking land to deliver purpose-built property solutions for their businesses. There is also relatively strong demand from owner occupiers in some of the larger existing building categories (10 to 15 000sqm). The wish list is long and varied for investors, however the majority of investors are seeking opportunities with a value add factor, rather than chasing passive opportunities. Have you seen a shift in developers moving away from residential projects to industrial given challenges around building costs? Any other industrial trends pertaining to the industrial sector? NO What is your outlook for 2024 in the industrial space? Industrial will remain well sought after by occupiers and investors given the strong fundamentals such as rental growth, low vacancy and a lack of ready to go industrial land and strong population growth. Overseas investors remain interested in Australian industrial space which will continue to trade at low passing yields. The sector will also continue to see purchasers from privates and occupiers highlighting the overall demand for industrial space.
October / November 2023 – 81
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