Hobart Hobart prime industrial market indicators Hobart Net face rent ($ sqm) $200 Incentive (%) 2.5 Yield (%) 5.8 Capital value ($ sqm) $3,448 Tasmania’s economy has struggled somewhat through the first half of 2022 after strong gains in the second half of 2021. Supply chain disruptions, high transport costs, falling dwelling and business investment as well as delays in the normalisation of tourism flow have all combined this year to dent growth. Even so, conditions in the labour market remain solid. Patterns in the economy have played out in industrial property activity, with a lag. Enquiry levels were very strong across most of the precincts (including Derwent Park, Kingston, Cambridge and Mornington) at the start of 2022, up until the federal election in May. Since then, business caution has increased and decisions are taking longer in the face of rising inflation, increasing interest rates and slowing economic growth. Indeed, the rising cost of debt has seen a change in the mix of occupiers looking for space, from one dominated by owner occupiers, to now tilting back towards tenants. Amongst those looking for space, the greater demand is for properties less than 500 square metres in size, with trades and builders serving the local population the most active. Low vacancies pushed average rents higher over the six months to June 2022, for both prime and secondary space. Higher quality space is leasing at an average $200 per square metre, up from $150 per square metre a year earlier. Secondary space is leasing within a band of $160 to $180 per square metre, reflecting an average $170 per square metre (significantly higher than 6 to 12 months ago). Leasing incentives do not play a significant role in Hobart’s industrial property market due to the high proportion of private owners. Some owners are securing leases incorporating no incentives, with 5 per cent reported as the ceiling. Leasing market 33 Industrial Market Monitor | 2nd Half 2022
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