INSIDE THIS ISSUE OF INDUSTRIAL PROPERTY NEWS We predicted a fall in the rental and price growth due to rising business costs. ISSUE 178 | MARCH 2025 | 02 9630 8000 | PAGE 2 Terry Saba: Director, Joumana Tarabay: Director Asset Management, Robert Ally: Director, and Jack Perkins: Associate Director Asset Management MARKET INSIGHT SPECIAL Rising Business Costs to Impact Rental and Price Growth in 2025 Falling business profit margins are likely to end the period of substantial growth in industrial rentals in 2025. In a SME tenant survey completed by leading industrial property agency Bawdens in 2024, respondents identified that substantial wages growth, coupled with substantial land tax increases, has resulted in a substantial increase in fixed costs to businesses. Many tenants recognised that, where possible, they would seek to negotiate downward their net rental in 2025. Bawdens Sales and Leasing Directors, Terry Saba and Robert Ally, also commented that when buildings for lease were offered at the correct market rental, tenant enquiries were sound. However, the lessors who accepted uninformed agent advice and listed their space for lease at the wrong rental, were experiencing an increased vacancy period. Not widely understood is that one of the key determinants of a business’ capacity to pay a rental is their profit margin. Growing productivity and GDP is necessary for the generation of business profit margin. With productivity and GDP both being challenged in 2025, rental growth is predicted to be subdued.
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