Leasing demand in Perth maintained strong momentum through the first half of 2022 and was particularly strong the in the South, all fuelled by the relatively robust growth in the Western Australian economy. Leasing volumes during the 2022 financial year were significantly higher than in the 2021 financial year and above or well above the long run average. The demand for industrial space in Perth is coming from a broad range of occupiers, most notably transport and logistics, manufacturers, companies servicing the mining sector as well as retailers servicing consumption growth (Marley Spoon’s commitment to a new 14,000 square metres warehouse at Jandakot is a prime example). We understand that many businesses want to occupy more space in Perth to store additional stock to combat supply chain disruptions, as well as to cater for growth, but are unable to do so due to very low vacancies across all the North, East and South regions. Vacancy rates across the Perth metropolitan area have dropped to less than 1 per cent by June 2022, with the strength of demand outstripping low completions. Reflecting the rapid tightening in the market this year, average prime stated rents rose rapidly across the regions during the first half of 2022. In the benchmark East, average net stated prime rents increased by 25 per cent over the 2022 financial year to $120 per square metre. Leasing incentives fell at a rapid pace during the 2022 financial year as the swift recovery in the leasing market flowed through. At June 2022, prime incentives in the benchmark East were 0 to 5 per cent, at an average 2.5 per cent. We understand that some institutional owners are offering incentives up to 10 per cent for new builds but are pushing face rents higher than the market average. Overall, effective rents rose appreciably through the 2022 financial year. Leasing market 26 35 Furnace Road, Welshpool WA 6106 Industrial Market Monitor | 2nd Half 2022
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