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Record year of warehouse occupier demand

demand

New research from Colliers shows industrial and logistics leasing activity is expected to reach almost 4 million sqm in 2021 in a new record year of demand.

Gross leasing volumes totalled almost 3.3 million sqm in 2020.

Luke Crawford, Director, Research at Colliers, says leasing activity in the first half of 2021 has already exceeded 2.3 million sqm and is broadly on par with the 10-year annual average.

“Our forecasts indicate that gross leasing volumes for 2021 would likely have been higher had there been the leasing options available in selected markets,” he says. “Nationally, the industrial vacancy rate has fallen to 3.5% while there are many major markets where the vacancy rate is 1.0% or lower which will place a cap on leasing volumes to some extent.”

The research found a rebound in population growth as overseas migration levels reverted towards long term averages and a pick-up in land availability in selected markets lead to the pick-up in leasing demand from 2024.

David Hall, National Director, Industrial at Colliers, says The sector is entering a new era with regards to tenant demand and the level of tenant enquiry in the market is at levels not seen before.

“While e-commerce, transport and the retail sector more broadly are driving tenant commitments in most markets, occupiers in selected manufacturing subsectors including food and pharmaceutical have become increasingly active in the leasing market and we expect this trend will persist,” he says.

David notes the just-in-time inventory model has changed to a just-in-case model, meaning industrial occupiers are now holding an additional 5-10 per cent of ‘buffer’ stock within their warehouses.

“When occupiers seek to implement new technology within a warehouse, it typically means a new facility which will create additional demand for pre-commitments,” David says. “The obsolescence of secondary industrial stock will drive the need for newer, next generation industrial warehouses.”

To download the full report, click here.

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