Adelaide industrial leasing demand hits record low in over a decade

Gross takeup dropped 82.5% in Q3.

Leasing activity in Adelaide’s industrial property sector significantly decreased over the quarter, recording the lowest quarterly total in more than a decade according to a JLL report. Gross take-up decreased by 82.5% q-o-q in 3Q22.

There was one major occupier move (>3,000 sqm) recorded, totalling 6,063 sqm in Adelaide’s North West precinct.

Here’s more from JLL:

There were two completions over the quarter, totalling about 11,500 sqm. The food meal prep business, Lite and Easy, completed an owner-occupied facility in Adelaide’s North West, and Vaughan Constructions completed a design & construct facility for food manufacturer, La Casa Del Formaggio.

Additionally, about 82,300 sqm of industrial supply is currently under construction and is expected to complete in 2022.

Average prime rents increase further

Average existing prime rents increased between 2.4%-8.1% q-o-q, depending on the precinct.

Prime midpoint yields were broadly unchanged, only softening in the North West precinct by 12.5 bps q-o-q. There were 18 major transactions recorded over the quarter, totalling AUD 464.8 million.

Outlook: Adelaide industrial yields start the decompression cycle

Yields are expected to soften as they stabilise from a cyclical low.

Rents are expected to increase further as occupier demand continues to outpace supply.