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The sub 5,000-square-meter industrial market in the central western regions of Sydney has continued to perform well over the last six months after a robust few years, according to the latest Ray White data.
Rezoning has seen total industrial land stock decline and new supply being heavily demand-led, according to Ray White’s latest Between the Lines commercial research.
The report also found that occupation levels had improved resulting in a reduction in available stock from 272,000sqm in July 2018 to its current rate of 236,400sqm.
Ray White head of research, Vanessa Rader, said the current rate of vacant industrial stock in the region was represented across 233 properties.
“Over the past six months, we’ve seen the level of vacancy fall 13.07 per cent from over 270,000sqm, with the greatest improvement seen in central north-west,” she said.
“Across our survey area, the greatest volume of available stock is in the central south-west precinct where there’s approximately 92,300sqm on the market, down from 108,400sqm in July 2018.
“Central north-west and central west account for 23.64 per cent and 37.31 per cent respectively of the total vacant pool of the survey area. Central north-west is heavily owner-occupied and currently has 55,891sqm of vacant stock, most notably in Seven Hills. While the central west region has been one of the poorer performers, representing 88,207sqm of vacant stock, up from 85,382sqm six months prior.”
Ms Rader said across the total central western Sydney region there were 233 vacant assets at an average size of just over 1,000sqm.
“The sub 500sqm size range represents the largest volume of vacancies being 86 assets, the bulk of these are in central north-west followed by central west, emphasising recent supply additions of smaller strata industrial units in these locations.
“In contrast, the larger 1,001-1,500sqm size range, which currently has 45 properties vacant or 58,429sqm, are dominated by more secondary assets in both the central west and central south-west, due to their age and quality.
“The suburb that’s yielded the greatest number of vacancies is Seven Hills, dominated by smaller industrial units. It has 36,991sqm vacant across 45 properties, resulting in an average size of just 822sqm.”
Ripe
Ray White Commercial NSW – Western Sydney associate director, Sam Bechara, said central west had attracted the highest rents, given its more central location.
“It's ripe for business operation and customer access. Rents here have grown to an average of $120/sqm for secondary, and $150/sqm for prime assets, yet still rents achieve above this range to as much as $200/sqm,” he said.
“Demand in the central north-west has subdued somewhat for rental assets, notably this area has a high level of owner occupation, while central south has grown in appeal given the newer stock that's entered this previously older style market.
“Average prime net face rents for the central south-west is now $135/sqm, while central north-west is slightly less at $132/sqm, with secondary rents averaging $103/sqm and $105/sqm respectively.”
Mr Bechara said despite the speculated uncertainty in the market due to the reduction in funding availability, investment yield levels continue to reduce.
“While volumes of sales have seen some reduction, the values attributed to these sales has been in contrary to the subdued sentiment surrounding the royal commission and the upcoming state and federal election,” he said.
“These events have not dampened the confidence in the industrial market, with many local, private buyers continuing to seek investment in this location, although there has been a more subdued, measured approach to investing.
“Encouragingly there has been further compression of the already low industrial yields, achieving rates well below the prior record levels recorded pre-GFC.”
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