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January 21, 2022

The industrial property market appears set to carry on with the strong growth it’s been experiencing over the past few years, as investor interest reaches record levels.

Since the onset of COVID, there has been a huge push towards businesses that are able to operate online, with e-commerce in particular seeing a huge boom. This, in turn, has led to huge interest in the likes of warehouses and other industrial real estate assets. It’s a trend that leading valuer Frank Knight believes will continue into 2022.

According to Frank Knight, investor volume in industrial and logistics real estate have already reached record levels in Q3 2021. Currently, there’s been a 72 per cent increase on 2019’s pre-pandemic high of $8 billion, and the year has still got a few weeks remaining.

Sydney and Melbourne See Strong Demand

Frank Knight believes the demand for industrial property on the East Coast has been so strong, markets like Sydney’s western precincts and Melbourne’s west and south-east are now at risk of critical shortages. The strong demand has seen prices rising, while vacant space has fallen dramatically, and rental growth rates have reached 1 to 2 per cent over the quarter in many markets.

With low vacancy, supply constraints, the continued expansion of e-commerce, and intensifying competition for space Frank Knight believes that strong rental growth and investor interest in this sector will continue throughout 2022.

Australia’s eastern seaboard has been the region to benefit the most, with an 82 per cent increase in activity in the sector. However, the trend is evident across the country. With the RBA poised to keep interest rates at record low levels, interest in commercial property is likely to remain high in 2022. Frank Knight also notes that there is increasing demand in both office and retail spaces as well, as Australia looks to move beyond many of the restrictions that have been in place in 2021.