WA’s industrial property market driving Australia’s economic growth
With confidence returning and the jobs market rebounding, Western Australia is believed to be at the forefront of Australia’s economic recovery, a new report has found.
CBRE has dubbed Western Australia as the “best state economy in the world”, given its resilience in the face of COVID-19, which it believes was majorly propped up by a strong-performing industrial property sector.
In its latest market snapshot, CBRE observed strong levels of enquiry and tenant demand for the state’s industrial market, with the headline market vacancy for warehouses over 4,000 sq m in size, down from 2.8 to 2.3 per cent in just six months
Interestingly, the majority of WA’s vacant space is attributed to secondary grade buildings, highlighting the flight-to-quality for occupiers to operate their businesses efficiently.
But despite recent wins, the real estate firm tipped WA’s industrial market to grow further on the back of several factors, including increasing global interest in the industrial market.
In fact, CBRE’s recent Investor Intentions Survey revealed industrial and logistics have become the most popular investment class for the first time in 2021, with 45 per cent of those surveyed seeking to enter the industrial market.
“COVID-19 has shifted the investment paradigm throughout the globe, highlighting the importance of holding well-located, quality products, with income secured by blue chip covenants,” the report noted.
Perth in particular is predicted to profit, with investors expected to boost their interest in gaining exposure to the more attractive yields on offer in the west coast’s core industrial market.
“With substantial amounts of capital on the sidelines waiting to be invested, combined with suppressed transactional volumes in 2020, 2021 is subsequently culminating into a larger year for purchasing activity,” CBRE explained.
Moreover, CBRE said that leasing metrics, too, will begin to grow on the back of a net positive demand for further floorspace required by many industries, particularly those mining and transport related.
In fact, the firm found that rents have already shown strong signs of stabilising, having previously tumbled as a result of the mining downturn.
Looking at the state’s wider economy, WA, CBRE believes, will benefit from the wave of global infrastructure stimulus that is expected to cultivate economic activity in the post-COVID world.
With all these fundamentals driving WA, combined with growing confidence, near record-low unemployment and population growth, CBRE expects the state to ultimately lead the nation’s economic recovery.
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