The public sector remains a strong, direct and indirect consumer in South Australia, abating the softer near term outlook for the private sector and consumer demand. The near-term outlook for public demand is bullish as health spending was a focal point of the 2022 election. As in other states, rising interest rates will dampen consumer demand over the next couple of years, but the impact will be cushioned by a strong labour market. Several defence programs based in Adelaide including military vehicles, and the Space Agency will support growth in the medium term. Near term occupier demand for industrial property is likely to remain stronger than what underlying economic conditions suggest, before moderating. Additional storage space has been sought after by companies looking to manage higher inventory levels to mitigate disruptions in the supply chain, and this behaviour will continue during 2023. Over the short term, investment in road projects from the public sector is expected to continue. This will improve the accessibility of different industrial areas, influencing the location choices of some occupiers. Following the completion of the Regency Road to Pym Street section, work on the North-South Corridor project continues with preparations for the final stage – the 10.5 km Torrens to Darlington Project – underway. This section, which provides a bypass to twenty-one intersections, is set to further enhance transport links. Construction is likely to be delivered in stages, with final completion expected in 2030. An increase in secondary space in the established and centrally located areas, over the medium term, is expected as companies relocate to take advantage of road improvements and newer more efficient premises. In the process, some sites may be lost to industrial usage. Industrial property demand is also expected to be supported through other state and federal government initiatives, which could see fluctuations in take-up. Government commitments to defence projects will support the “Defence State” economy and several large projects driven by major aerospace, land and maritime defence companies are expected to be based in South Australia. Leasing outlook 19 55 Oaklands Road, Somerton Park SA 5044 Industrial Market Monitor | 1st Half 2023
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