The industrial leasing market remains solid. As with many locations, demand for industrial space received a boost in Adelaide as a result of the pandemic. It has been further helped by recent improved population growth in South Australia (and associated demand for goods). The strength of occupier demand has reduced vacancy rates in Adelaide to low levels, in turn underpinning strong rental and land value growth. Manufacturing and logistics have been key contributors to occupier demand, bolstered further by the growth in mining and e-commerce. Recent examples include Wine Storage & Logistics leasing 17,890 square metres of space in Edinburgh in the first half of 2022, while Mine Tech Engineering leased a further 17,078 square metres in Edinburgh. M3 Logistics, UCI Manufacturing and Baiada Poultry also secured leases in the first half of 2022, contributing to around 60,000 square metres of take-up in this period, most of which was concentrated in the Outer North. Adelaide experienced very strong rental growth across most precincts and grades of industrial property space through the first half of 2022. Leasing incentives remained largely unchanged despite vacancies falling below 1 per cent. Average prime rents ranged from $81 square metres in the Outer South up to $127 square metres in the Inner West at June 2022. Secondary rents also rose slightly over the six months to June to reach an average of $77 per square metres. The growth in the secondary rental market was due to increased interest in the Inner North, Outer North and Outer South precincts, with greater availability of product,and a lower rental base for the latter two. Land values have trended up over the last couple of years, and this pattern continued in the first half of 2022. The relatively affordable Outer North and Outer South, together with the much more expensive Inner North have recorded the strongest growth recently. The completion of the further sections of the North-South Corridor (motorway) as well as demand from owner-occupiers buying sites for new purpose-built premises have been key drivers. The extent of increased demand for land has not only pushed up prices but also greatly reduced land availability. Prices range from about $150 per square metres in the Outer North and Outer South to around $620 (for lots under 5,000 square metres) in the site-constrained Inner South and Inner West. Leasing market 20 Industrial Market Monitor | 2nd Half 2022
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