Western Australia - Market Review March 2021

What a difference one year makes! 12 months ago, the entire country was preparing to enter a series of periodic lockdowns across a range of industries. Sentiment was crippled and the economic prognosis was uncertain. 12 months later and the Western Australian economy is powering the country, driven by record high mining exports and favorable interest rates. The industrial property sector has continued to improve from the green shoots of January and February 2020. The conditions seen today are arguably the best in the past five years with a number of strong leasing and sales transactions taking place.

Sales:

The owner occupier market continues to drive vacant possession sales with a number of strong sales results being seen across the major eastern and southern industrial sub-markets. We have witnessed owner occupiers from industries associated with construction and mining taking advantage of the low interest rates to acquire quality industrial assets. Investors are still heavily active as purchasers in the market however limited supply of assets with long leases to strong tenants means these types of opportunities seldom arise. Many landlords are reluctant to sell prized assets due to the lack other alternative investments available.

Leasing:

The availability of high quality stock has diminished significantly over the past six months, with incentives now dropping below 5%. This ‘flight to quality’ has been witnessed over the past five years due to the large availability of stock which had saturated the market at the time. Older buildings continue to experience subdued rentals and extended time on market unless significant investment in capital works are undertaken to attract quality tenants. Over the past few years, many landlords undertook extensive refurbishment works to reinvigorate their assets and have been rewarded with long leases to quality tenants.

By Rory Feely
MLV Real Estate