WHILE there are currently many global uncertainties, the Perth economy is showing signs of improvement, according to Ray White’s latest Between the Lines* report.
The research showed despite having a having a heavy reliance on exports and rising commodity prices, the State has shown improvements in jobs growth and population increases, which has led to positive GSP results.
“Take-up in industrial space has especially been outstanding over the past two years, highlighting the increased demand for stock, notably for small businesses,” said Ray White’s Head of Research Vanessa Rader.
“While net face rents have been affected, the vacancy situation continues to improve, and the market is likely to enter a period of rental stability until more absorption is recorded.
“Encouraging, is the increase in opportunistic investors enquiring on stock in the Perth market, signaling their anticipation of growth in the short to medium term.”
Ray White Commercial (WA) Director Chris Matthews said over the last 12 months, Ray White Commercial’s vacancy survey of the sub-5,000sq m industrial market across Perth had resulted in a take-up of over 130,000sq m, being the second year of substantial absorption.
“This improved confidence has translated into a total of 854,340sq m of vacant stock which is actively being marketed (down from 985,130sq m),” Mr Matthews said.
“The Northern precincts have enjoyed the greatest take-up over this period and now account for 38.64 per cent of stock, compared to 41.98 per cent six months ago.
“This market has a high volume of smaller stock available, resulting in the average vacancy of just 594sq m.
“Right now, there are 1,212 Industrial properties under 5000sq m currently listed for lease across the Perth metropolitan area, this is down 18.98 per cent over the last year.
“The stand-out performer being the smaller size range 0-500sq m which now represents 46.32 per cent of total listings, down from 64.44 per cent 12 months ago.
“The Northern precincts have enjoyed the greatest level of take-up for these smaller assets, followed by the East over the last year, which is reflected by the slight reduction in rents.”
Mr Matthews said for the second consecutive year, there had been the greatest improvement in vacancies across the Eastern precincts within the smaller sub-1,000sq m size buildings.
“Canning Vale, Welshpool, Belmont and Kewdale have all reduced their number of vacancies, with the take-up being from growing local businesses, as well as tenants looking to upgrade into better quality accommodation during this ‘tenant market’,” he said.
“Despite a strong improvement over the last year, the North continues to have a high number of sub-500sq m assets, with Malaga continuing to maintain the highest vacancy with 138 known available buildings, totaling 83,924sq m, keeping the average vacancy of 622sq m.
“Wangara has taken the title of the smallest average vacancy in the North, now featuring 96 vacancies with an average size of 579sq m, followed by Osborne Park with 79 vacancies with a slightly larger average of 734sq m.
“We’ve witnessed some improvement in confidence surrounding the Perth industrial market over the last six months; this has resulted in take up in space, however, slightly at the expense of average net face rents, especially for properties of a lower standard.
“With high competition in the market, there has been a greater acceptance by owners to correct their rental expectations in order to secure a tenant; with absorption now enjoyed, rental declines have moderated.
“As rents have shown stability over the last six months, this may signal the end of rental contractions in the short term.”
*Ray White Between the Lines – Perth Industrial Sub 5,000sq m Leasing – April 2019.