What was the biggest industrial completion in Adelaide in Q2? | Real Estate Asia
, Australia

What was the biggest industrial completion in Adelaide in Q2?

It was a 15,400sqm expansion for a meat processing plant.

There was 28,300 sqm of new supply added to Adelaide’s total industrial stock in the second quarter, marking consecutive quarters of decreasing supply delivery. 

According to JLL, a slowing of pre-lease and design & construction demand has been the catalyst for lower supply, with occupiers pausing business accommodation upgrade and expansion decisions until the future economic outlook becomes clearer.

Here’s more from JLL:

The largest completion of the quarter was a 15,400 sqm expansion for meat processing company Inghams, which was delivered by Goodman Group on land adjacent to Inghams existing facility in Edinburgh in the Outer North precinct.

Quarterly gross take-up improves q-o-q

Occupier demand from smaller warehouse users has increased quarterly gross take-up in the quarter (32,400 sqm). This figure is below the average quarterly gross take-up recorded over the last two years (34,700 sqm).

More broadly, there has been a lack of large occupier moves in the Adelaide market, with all activity in 2023 limited to the sub-10,000 sqm size cohort. In the quarter, there were six major occupier moves, with the largest being a 6,800 sqm deal to Enerven Energy at 2-8 Mirage Road, Direk in the Outer North precinct.

Average rents and incentives hold firm

There was no movement in average rents and incentives in the quarter across all precincts and grades. A decrease in occupier demand has been somewhat counterbalanced by a lack of modern warehouse space to lease, resulting in a stabilisation of asking rents.

Average land values increased again in the quarter as demand from opportunistic owner-occupiers boosted demand for development sites. Average land values increased between 2.9% and 20.0% q-o-q over the quarter.

Outlook: Slowing retail trade environment likely to impact the market

Pre-lease demand is slowing, with businesses maintaining a wait-and-see approach on its relocation decisions in light of an uncertain economic outlook. Speculative supply from developers is also likely to slow as the vacancy risk on new supply grows.

Low supply should support ongoing rental growth over the short term. However, the yield decompression cycle is expected to persist through to the end of 2023 and into 2024 as the cost of debt negatively impacts investment return hurdles.

 

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

 

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