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Sydney and Melbourne reap benefits of increased demand for industrial property

By Bianca Dabu 29 April 2021 | 1 minute read

The industrial property sector appears to be booming across Australia’s two biggest cities on the back of an increasing demand for warehouses post-COVID-19.

Sydney and Melbourne reap benefits of increased demand for industrial property

New data has revealed significant occupier demand for warehouse space in 2020, with the strong momentum said to have continued into 2021, buoyed by the strong macro tailwinds which are supporting demand.

According to Colliers’ latest report, in 2020, just over 3.2 million sq m was leased nationally, up 38 per cent on the 10-year average and was dominated by the Sydney and Melbourne markets, which collectively accounted for 84 per cent of take-up for the year.

For the other capital cities, demand was somewhat patchier with a clear tenant preference for prime grade stock.

Breaking down the data sector by sector, Colliers found that retail accounted for 44 per cent of the gross take-up in 2020, followed by transport and logistics at 28 per cent.

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The high level of take-up from the retail sector was underpinned by several significant pre-commitments and included just over 250,000 sq m to Amazon in Sydney, Melbourne and Brisbane.

Similarly, Coles and Woolworths leased over 170,000 sq m in the Sydney and Melbourne markets as they moved to adopt automation solutions.

This strong momentum was sustained in Q1 2021, with the same capital cities and sectors at the forefront, according to Colliers’ research director, Luke Crawford.

Over the first quarter, over 1 million sq m of space was leased, with Sydney and Melbourne accounting for 43 per cent. Take-up was led by the transport and logistics and retail sectors at 28 per cent and 25 per cent, respectively.

Moving forward, Mr Crawford expects the rise in leasing activity to continue for the duration of 2021, with Brisbane, Adelaide and PerthPerth, TAS Perth, WA expected to drive most of the anticipated growth.

“Take-up is expected to remain heightened in Sydney and Melbourne, however, capped to some extent by the lack of leasing options in some submarkets.

“With industrial land coming online in Sydney within the Mamre Road precinct, take-up will be again dominated by pre-commitments,” he concluded.

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Sydney and Melbourne reap benefits of increased demand for industrial property
Sydney and Melbourne reap benefits of increased demand for industrial property
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