THE PROPERTY DEVELOPMENT REVIEW
Perth market, albeit takeup volumes remain restricted by a lack of existing leasing options in core precincts. As a result, lease renewal rates remain at historical high levels. In Q1 2024, gross take-up totalled approximately 33,000 sqm (3,000 sqm and above) and follows a total of 275,000 sqm leased in 2023. The supply vs demand ratio remains consistently imbalanced, with vacancy rates anchored near historic lows, particularly within the core precincts. What does the development pipeline look like for the Perth industrial market and what are some notable development projects slated for commencement in 2024? Roughly 50,000 sqm of new supply was added to the Perth market in Q1 2024, with the majority stemming from the speculative additions at ASCEND Industrial Estate (Dexus) at Jandakot Airport and Centuria’s 12,300sqm development of 204 Bannister Road, Canning Vale. Notably, this included roughly 38,500 sqm across two projects at ASCEND Industrial Estate by Dexus, with 25,000 sqm at 8 Centurion Place, Jandakot which is one of the largest speculative industrial projects in Perth’s history. This followed almost 225,000 sqm which was added to the market in 2023 across pre-lease and spec development. Looking ahead, there is potential for a further 90,000- 100,000 sqm of speculative supply to be added to the market in 2024, taking the annual total to close to 150,000 sqm. Historically, supply in the Perth market is largely via a design and construct (pre-lease) basis, however, the bulk of new supply in 2024 is via speculative construction projects. This reflects the increased institutional presence and convction in the performance of the WA industrial market in years to come.
Other major speculative additions for 2024 include ~13,500 sqm at 7-11 Cook Street, Canning Vale and ~6,845 sqm at 93 Vulcan Road, Canning Vale both being developed by Fife Capital, ~15,510 sqm at 189 Bushmead Road, Hazelmere being developed by Barings, ~10,480sqm at 58 Anderson Place, Perth Airport (PAPL), ~10,039 sqm at 160 Adelaide St, High Wycombe (Hesperia), ~ 15,648 sqm at 146 Maddington Road, Maddington (Capital Prudential). Beyond this, there are multiple other tenant driven pre- lease opportunities across the Perth market; however, the delivery of this is dependent on pre-commitments from occupiers. In your market, in the January-March period, what product experienced the most buyer demand and has this changed over the last 12 months? It is no secret that zoned industrial land remains in record high demand, with Perth historically being a land scarce industrial market. This has been further exacerbated by record levels of occupier take up and tenant demand. Local and national developers continue to seek to improve their short to medium term development pipelines through land acquisitions ideally with short to medium term holding income in order to meet tenant demand, however it is very challenging to unlock this type of product within our core precincts. From an investment perspective, value add assets with low site coverage, potential for further development, or access to positive rental reversion within the short- medium term remain the most in demand product currently.
May / June 2024 – 113
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