10 industrial projects to be completed in Perth in Q1 2024

These projects will add nearly 114,000sqm to the city’s supply.

Two major industrial developments (≥3,000 sqm) reached completion in Perth in the third quarter, totalling 24,600 sqm, according to a JLL report. There are ten projects totalling 113,900 sqm currently under construction, expected to be completed by the first quarter of 2024.

The report said the potential future supply pipeline has seen a significant uplift, with 14 projects in the plans approved or plans submitted stages totalling 150,300 sqm. A large proportion (91.3%) of these projects are speculative developments.

Here’s more from JLL:

Occupier demand in the Perth market increased over the quarter, with 87,300 sqm of gross take-up recorded across 11 major occupier moves (≥3,000 sqm). Activity recorded in the quarter was above the two-year quarterly average of 55,100 sqm.

The Perth industrial market recorded 189,200 sqm of gross take-up over the last 12 months, below the 10-year average of 207,300 sqm. Demand was led by the Transport, Postal & Warehousing (26.8%), Manufacturing (19.0%) and Mining (13.4%) sectors.

Rents stable across all Perth industrial precincts

Average prime existing net rents were unchanged across all three precincts in the quarter; the third consecutive quarter that rents were stable. Nevertheless, annual rental growth has been robust across all precincts. Rents in the South precinct were up 8.8% y-o-y, while the East and North precincts both recorded increases of 7.7%. Incentives remained stable at record lows.

Rising cost of debt pressures has continued to slow investor demand, leading to further yield decompression for industrial and logistics assets. Prime yields decompressed by 25 basis points across all three precincts in the quarter, to a mid-point of 6.00%.

Outlook: Rental growth is expected to soften moving forward

Rental growth is expected to remain positive in the medium term, driven by strong demand and scarcity in supply. Nevertheless, with broader economic conditions anticipated to remain soft over the short term, rental growth expectations are set to be softer.

Occupier demand is anticipated to stay elevated assuming broader economic conditions remain positive. The e-commerce sector is expected to continue to lead sectoral demand, driven by strong ongoing consumer spending tailwinds.

Note: Perth Logistics & Industrial refers to Perth's industrial market (all grades).