- Big fight for Australian industrial property in 2017
- Confidence returning to industrial estates in Sydney’s west
Sydney could run out of industrial land to build the new warehouses and logistic facilities needed to power the NSW economy within just six years, commercial real estate agents Colliers International warn.
The firm’s latest industrial forecast report says the rezoning of inner suburban industrial land for new Sydney housing over the last five years is starting to have a real impact on the availability of development-ready land in the outer suburbs and has also driven up prices.
“Competition is increasing for development land between the property institution looking for long term industrial investment property, and the industrial business looking to own their own premises, which has lifted prices by over 25 per cent in the last 24 months” said Malcom Tyson, managing director, of industrial at Colliers International.
“Any large land parcels that are suitable for major industrial estates will be chased hard in 2017,” he added.
Colliers International forecasts about 500,000 square metres of warehousing will need to relocate from the inner suburbs to the outer western fringe over the next five years while demand for industrial land to build new facilities will be between 150 and 250 hectares a year over this period to accommodate population growth and cater for the massive infrastructure spending program.
The lower end of this demand would translate into 10 years’ supply of zoned industrial land, but just six years if demand is closer to the upper end of forecasts. Between 2008 and 2015, take-up of industrial land averaged 155 hectares a year.
However, there is a pressure release valve for Sydney with about 4500 hectares of land currently under investigation for industrial, retail and commercial uses as part of infrastructure development plans for the Western Sydney Priority Growth Area.
If this land were to be rezoned to accommodate industrial development, this could increase supply to be between 14 and 24 years.
According to Colliers International, there is currently just over 13,500 hectares of industrial-zoned land in Sydney, with almost 60 per cent of this land in the outer west.
Sydney’s south and inner west, where much of the rezoning to residential has occurred, make up just 20 per cent of the industrial land market.