The squeeze on industrial land continues in Sydney, and one region is reaping the benefits of a huge increase in enquiry.
According to Colliers International, the Sutherland Shire industrial precinct, bounded by Woolooware Bay in the South and Kirrawee in the North, is witnessing a huge growth in industrial users seeking space after the squeeze on the South Sydney industrial area.
Industrial users who are not reliant on immediate proximity to the Sydney Airport or Port Botany are heading south, where areas such as Taren Point and Kirrawee are growing as much as 15-20% year on year.
In the last five years, there have been significant withdrawals from the industrial South Sydney market, as a result of rezoning of industrial land to a higher and better use along with compulsory government acquisition of multiple industrial land parcels for the Westconnex and Metro Rail.
This has caused many tenants and owners to head South to take advantage of the more affordable pricing, lower outgoings and range of various options that this very strong precinct offers.
“The appeal for industrial owners & occupiers is preferential pricing on other industrial markets, but equally the appeal of accessing a local workforce and a much shorter commute,” said Trent Gallagher, National Director, Industrial for Colliers International.
“With the proposed infrastructure of the F6 motorway extension to come over the coming years, this is a lifestyle precinct coupled with efficient industrial facilities only 15 minutes south by car from Sydney airport – doesn’t get much better than that.”
“Subsequently, there has been increased competition in all the on and off-market opportunities and price growth and yield compressions is as strong as ever.”
“Many property investors are seeing considerable value add in the Sutherland Shire market as the strong belief is that rental values in this precinct will continue to grow as more users shift south from South Sydney to the Sutherland Shire creating more demand which will continue to increase rents.”
Colliers recently sold a fully leased industrial asset leased to Thrifty Car Rental in caringbah for a record yield of sub 4%.
Colliers International research suggests that there has been steady growth in the gross regional product for the area over the last fifteen years, with small increments in the residential population.
The estimated local jobs of 85,919 looks set to grow on the back of investment and better infrastructure in the area, already up 6.88% on last year. With very low local unemployment of circa 2%, well below national average, this is a strong market for local jobs, underpinning the growth of industrial assets in the area.
The Colliers International team are very active in the Sutherland Shire industrial market and to date they have transacted approx $124,000,000 worth of industrial property in 2019 alone and majority of these transactions being buyers shifting south from the core South Sydney market around Mascot, Alexandria and Botany.