Australia has the lowest industrial and logistics vacancy rate globally after falling to 0.8% during the first half of 2022.
The national vacancy rate, taken from the country’s five major markets, fell from 1.3% recorded at the end of 2021, according to CBRE research.
Following Australia was Sweden (1.1%), Belgium (1.3%), the United Kingdom (1.6%) and Hong Kong (2.3%).
The global industrial and logistics vacancy rate average at the end of H1 2022 was 2.7%, with mainland Europe as a collective and the USA sitting at 2.6% and 3.1% respectively.
Sydney had Australia’s lowest vacancy rate following a further reduction from 0.4% to 0.3% over the past six months, in addition to the world’s lowest city rate.
|H1 2022 vacancy rate||H2 2021 vacancy rate|
“From 6.3% at the end of 2019, Australia’s I&L vacancy rate has trended down, to its current record low of 0.8%,” CBRE’s Head of Industrial & Logistics Research Australia Sass J-Baleh said.
“Although vacancy rates around the globe have also fallen over the past 12 months in particular, Australia now has the lowest national vacancy rate globally, and Sydney the lowest vacancy rate of any city.
“With Australia’s highest vacancy rate in any market now just 1.4% in Brisbane, the downward movement recorded for each market reflects the current chronic undersupply.
“Australia has a relatively low share of developments that are speculative, especially compared to other major markets, so we are unlikely to see vacancy rates change significantly over the next 12 months.”
Super prime grade rents rose on average 13% year-on-year to the end of June, already exceeding CBRE’s full-year forecast of 12%.
Sydney rents rose 23% year-on-year, followed by a 17% rise in Perth and 14% in Melbourne.
“The depth in demand is giving owners and developers significant choice, and only occupiers with the strongest covenants are winning the right space,” said Cameron Grier, Regional Director of CBRE Industrial & Logistics in Pacific.
“We expect demand to continue to outpace supply this year and into 2023, and we are seeing rental growth above CBRE Research forecasts.
“New buildings in the 4,000 sqm-5,000 sqm range in Western Sydney, for instance, have broken past the $170/sqm net barrier, which is about $30/sqm more than they were at the start of the year.”
Most of Australia’s major markets have high pre-commitment levels on supply in the pipeline, including Sydney with 73% of the city’s incoming 875,000 sqm.
“Speculative developments only account for 33% of the floorspace in Australia’s pipeline, compared with 76% in the USA, 57% in the UK, 48% in Spain and 43% in Germany,” J-Baleh said.
“That means the Australian market is less susceptible to volatility and major fluctuations in supply and vacancy levels moving forward.”