The quantum of industrial property completions across the Perth industrial market during 2021 was below long-run averages, with circa 100,000 square metres finished, or about the same as 2020. Rapid escalations in construction costs in recent times (due to labour and materials shortages) and land value gains, mean rents required for development feasibilities have shot up. Based on projects under construction, industrial completions are slowly increasing across Perth, but remain below average, with just over 100,000 square metres due for completion this year. The largest projects recently completed, under construction or at site works include: • A 25,000 square metres distribution centre, pre- committed to Australia Post at 112 Pilbara Road, Welshpool; • A 20,000 square metres warehouse at 111-121 McDonell Street, Welshpool, committed to an undisclosed tenant; • A 18,000 square metres warehouse on Centurion Place, Jandakot Airport; • A 14,000 square metres warehouse on Sparton Street, Jandakot Airport, pre-committed to Marley Spoon; But so have market rents, pushed higher by extremely low vacancy rates. As a result, some developers are pushing ahead with speculative projects to capture demand from tenants who cannot wait from pre-lease space to be delivered. • Two warehouses for a combined 16,500 square metres at the Roe Highway Logistics Park, Kenwick; and • A circa 6,400 square metres warehouse under construction at Lodge Drive East, Rockingham. The latest warehouse and factory approvals data to June 2022 shows that activity is picking up, with the combined value reaching $420 million, but this is still well below previous peak levels. However, the recent uplift is taking time to flow through to commencements. Furthermore, labour and material shortages are likely to lead to some delays in the construction of new industrial properties. Though, we understand that project delays for developments that are underway are not as severe as in other parts of the country. Supply Supply outlook 29 Perth demand and industrial building approvals Industrial Market Monitor | 2nd Half 2022
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