IN terms of annual growth this year, Wooroloo was one of the best performers across Perth registering a growth rate above 14 per cent, according to the Herron Todd White 2018 review of Australia’s property markets.
The review said one of the more notable transactions during the year included 7 Ashby Close, Forrestfield, which sold for $20.5 million in April.
The Forrestfield-Airport Link and NorthLink WA were both mentioned in the review as notable infrastructure projects underway in Perth.
“The Forrestfield-Airport Link is the construction of a new passenger rail line linking Perth City to Perth Airport and continuing further east to the suburb of Forrestfield,’’ the review said.
“Once completed this project is likely to enhance the profile of the Forrestfield industrial precinct and drive new development particularly around the train station.
“Construction is well advanced and the link is scheduled to be operational in 2020.
NorthLink WA is a $1.02 billion transport project in Perth’s east and north-eastern corridor estimated to be completed in the middle of 2019.
The new highway will provide a non-stop transport route from Morley to Muchea that is likely to directly benefit industrial estates in that corridor.
The review said the broader Perth industrial property market remained subdued during 2018, with market conditions coordinating with the downturn in the resources sector which had previously driven strong rental and capital value growth.
“Discussions with agents active in the leasing of industrial accommodation indicate that there is minimal enquiry for vacant space and a number of insitu-tenants are continuing to reconsider their space requirements in the context of the current weak market conditions,’’ the review said.
“There is clear evidence of a lessee’s market at present with the limited number of prospective tenants taking advantage of the oversupply of stock and often able to negotiate very attractive deals.
“To an extent, industrial leasing activity is mirroring trends in the Perth office market with a flight to quality being evident.
“Face net rental rates for prime industrial warehouse premises tend to range between $75 and $90 a square metre per annum, while rates for secondary quality space are commanding between $50 and $65 a square metre per annum.
“While there has been a tendency in the market to limit incentives (usually between zero and 15 per cent), this has placed considerable downward pressure on face rental rates.’’
The review said from a purchase perspective, demand for industrial property was generally also subdued with a low volume of transactions during the past 12 months.
“These soft market conditions are more pronounced within secondary industrial precincts.
“There have been few opportunities to acquire good quality, securely leased assets.
“Somewhat counter intuitively this has led to yield compression for such properties despite the general malaise that has engulfed the broader Western Australian economy.
“Yields for prime industrial assets tend to fall between 6.25 and 7.5 per cent with yields for secondary industrial properties much softer.
“Discussions with real estate agents active in the sector also confirm the softening in demand for vacant industrial land.
“Feedback suggests the lack of demand tends to be a function of the very limited number of prospective buyers as opposed to pricing, particularly for those sites less than 2ha.’’