This was the largest completion in Adelaide’s logistics market in Q1

It was a project spanning nearly 22,000sqm.

Industrial completions in Adelaide totalled 34,200 sqm in 1Q23 according to JLL, decreasing from 81,900 sqm in 4Q22, which was the strongest quarterly figure since 4Q20. This brought supply over the last 12 months to 153,800 sqm.

The largest completion over the quarter was the 21,980-sqm Apex Steel Distribution Centre at 36 Caribou Drive, Direk in the Outer North precinct. It was developed by the Centuria Diversified Property Fund (CDPF).

Here’s more from JLL:

Occupier activity decreased in 1Q23 with about 24,000 sqm of quarterly gross take-up recorded. The majority of gross take-up was recorded in the North West precinct (77%) with the balance recorded in the North East precinct (23%).

The largest recorded occupier move in 1Q23 was by appliance manufacturer Daikin, which leased 7,580 sqm in Centennial’s Royal Park Distribution Centre (North West precinct).

Supply decreases in 1Q23

Average prime rents increase across most precincts in 1Q23

Average prime net face rents increased across most precincts in 1Q23. The largest increase was recorded in the North West precinct (3.9% q-o-q), followed by the Outer North precinct (2.3% q-o-q). Scarcity of availability continues to place upwards pressure on rents, particularly in larger warehouses where there is limited speculative development.

Yields continued to soften in the Adelaide industrial market, with decompression of 25 basis points recorded across all precincts.

Outlook: Occupiers and investors likely to remain cautious in 2023

Business confidence is expected to deteriorate further in the face of ongoing economic volatility globally. However, undersupply of modern warehouse space to market will remain a factor in occupier activity.

Strong lease covenants will likely increase in importance for investors as the appetite for risk decreases. It is expected that yields will decompress further over the balance of the year.

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