Property
Issue No. 46 - April/May 2009
Transport links’ industrial strength
by Mr Kel Spencer
Demand in the Adelaide industrial leasing market has been high during the later half of 2008 and early into 2009, with the ongoing lack of supply continuing to put strong pressure on rental prices.
The additional upward pressure on land values and construction costs pushed rents higher. Since the first quarter of 2008 rents for the Adelaide industrial sector have jumped from an average of $90-$130/m2 to $100-$160/m2 – an increase of about 20%.
Towards the end of 2008 owner-occupier activity was increasing for properties less than $5 million, in particular properties in traditional industrial precincts.
The increased activity illustrates a shift by business owners attempting to avoid currently high rents, while securing a long-term asset.
Emerging evidence from 2008 reveals unbalanced levels of supply and demand in the SA market. The lack of development opportunities in inner Adelaide regions is likely to blame for the imbalance. However, areas within 10km of the CBD with easier transport access have been showing higher demand than primary areas. Inner South, North and West are retrieving high demand growth and this is illustrated in the land and rental values.
Lack of supply in serviced areas is making infrastructure popular in outer areas, in particular the Outer North. Due to inner suburbs’ competitiveness firms are being forced out to gain supply, which should be highlighted further in coming quarters.
Major transport route improvements including the Port River Expressway, the South Road upgrade and the Northern Expressway continue to reduce travel time and improve accessibility to Adelaide’s major industrial precincts. These improvements are significantly influencing the industrial market and illustrate the importance of transport infrastructure to this real estate market sector.
The past year has seen a shift in land sales activity towards the north and northwest due to a improved availability of suitable land....
