Surge in manufacturing, technology drives demand for industrial property

“In the past few decades the nature of manufacturing has transitioned from heavy industry to high-tech production, particularly consumer goods and food/pharmaceutical products. With the rise of ecommerce, supply chain reliability continues to be a key focus for businesses where consumers expect fast delivery of products.”

Curtis said the desire to provide a fast and efficient supply of goods had led to a resurgence in local manufacturing.

Savills Australia says the technology used for renewable energy, such as solar panels, will form part of the expected growth in manufacturing.

Within its industrial portfolio Centuria leases significant food production sites to Arnott’s Biscuits in Queensland and South Australia, and to Visy, which makes packaging at major sites in NSW.

Dean said the rapid electrification of various sectors, more equipment and technology to produce renewable energy and electric vehicle batteries would assist the federal government reach its carbon emissions goals. The government has set a broad aim of achieving net-zero by 2050.

Savills Australia national head of industrial and logistics Michael Wall said there had been growth in industrial investment.

“Following an unprecedented three-year growth period, marked by face rents soaring up to 80 per cent in select markets and vacancy rates at below 1 per cent, there has been a significant surge in capital-seeking investment opportunities in the industrial sector,” he said.

Saranga Ranasinghe, a senior analyst at ratings agency Moody’s, said industrial property was the strongest performing asset class, but warned rental growth would ease.

“Industrial space availability remains tight on scarcity of serviced zoned land despite new supply,” Ranasinghe said.

“Tenant demand is solid on the back of population and e-commerce growth, global supply chain efficiencies, and growing cloud computing and artificial intelligence applications that drive demand for data storage. However, rental growth has peaked, and vacancy rates will inch up from record-low levels.”

Ranasinghe said the high amount of industrial developments undertaken by the industrial property real estate investment trusts was further evidence of increase in supply. The trusts would increase their portfolio weighting to industrial assets, she said.

The Goodman Group and Charter Hall Prime Industrial Fund have also increased their portfolio sizes significantly over the past four years.

Construction work at Western Sydney International Airport this month.

Construction work at Western Sydney International Airport this month.Credit: Wolter Peeters

Charter Hall and Western Sydney International Airport have signed a 50-50 joint venture to develop the first stage of the business precinct around the airport.

On completion, the 20-hectare mixed-use development will comprise up to 40,000 square metres of modern warehouse space, ancillary offices, a 150-room hotel for flight crews, a service station and retail and food outlets, as well as gym and conference facilities.

Construction of the first stage of the business precinct also includes roads and landscaping.

The precinct will initially serve thousands of workers building the airport and its extensive connecting infrastructure, and will later be used for airport customers and the community.

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