CANBERRA Canberra prime industrial market indicators Canberra Net face rent ($ sqm) 200 Incentive (%) 1.0 Yield (%) 6.0 Capital value ($ sqm) 3,333 Demand for industrial property was stronger than underlying economic fundamentals suggested last year. Both owner occupiers and tenants showed strong demand for space of all sizes. However, last years’ rises in interest rates have slightly tapered owner occupier demand levels. Unlike other capital cities where e-retailers and logistics operators are prominent, Canberra’s industrial market demand was mostly notably driven by construction groups in 2022. This sector supports public sector spending and services major projects (including the Canberra Light Rail stages, the expansion of Canberra Hospital and a couple of major office buildings). In addition, some construction companies are attempting to take extra space to store higher inventory levels to counter supply chain disruptions, but efforts are being hampered by low vacancy rates. The second half of 2022 saw low building vacancies across Canberra’s four main industrial precincts, in both prime and secondary quality buildings. Responding to falling vacancy rates, prime rents grew strongly through the first half of 2022 reaching an average $200 per square metre, a level they sustained though the second half of 2022. Amongst the precincts, Mitchell is tightly held with rents well above other areas. In line with a tight leasing market, incentives are very low in Canberra, sitting between 0-2%, reflecting a 1% average. Leasing market 26 Industrial Market Monitor | 1st Half 2023
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