Industrial sector outperforms all real estate classes

“Changing consumer preferences towards online grocery and food platforms in 2020 has resulted in strong occupancy demand from occupiers in the food subsector,” he noted.

“These businesses have continued to perform well, with expenditure on food items rising by 11 per cent since panic induced buying in March 2020, well above the 2.8 per cent recorded for the corresponding period in 2019.”

This trend saw corporate groups underpin the vendor profile, accounting for nearly 60 per cent of assets traded, with most sold via a sale and leaseback arrangement, Mr Bishop pointed out.

Geographically, the east coast states accounted for 91.6 per cent of investment volumes in 2020 as “institutional groups look to capitalise on strong leasing fundamentals and favourable outlook for further yield compression in these states.”

Looking ahead

Experts believe that the industrial and logistics sector could be in for another year of growth in 2021, supported largely by positive investor sentiment that is expected to jump-start a broad-based renewal of activity in the market.

In fact, Colliers predicted that around $26 billion in capital will be placed in the market and broadly spread between offshore and domestic institutions, along with private investors.

According to Mr Bishop: “Given that just $5.49 billion transacted in 2020, it highlights the significant mismatch between supply and demand.

“This depth of capital will continue to drive further yield compression in the sector in 2021, albeit concentrated in prime assets as investors chase security.”