After a strong year in 2021, Industrial sales volume has softened in 2022.
The appetite for industrial assets remained buoyant in the six months to December 2022, however, the rapid increase in the RBA Cash Rate has led to some buyer hesitation emerging. The broader expectation is for a softening of industrial yields, however, this may, in view of limited leasing stock availability, in part or in full, be offset by rental growth; yields on some assets may stay stable in the short term on the expectation of higher rents. Having said that, the emerging industrial supply may provide some relief to rising rents.
Cygnet West’s analysis of all industrial transactions showed that a total of 1,609 sales amounting to $3.9 billion had transacted in 2021. Some major assets/portfolio sales like Jandakot Airport combined with capital value inflation over the past 20 years helped boost transaction values to an all-time high, especially for the South region. Activity was also historically strong in the East region.
In 2022, preliminary settled sales data indicate volumes have fallen to 969 sales that amounted to $1.9 billion.
Major asset sales have also peaked.
In terms of major (+3m) transactions, the volume of sales has been trending higher, led by capital value growth and larger assets/portfolios being targeted by institutions, syndicates and HNW individuals & family offices.
These transactions also spiked in 2021 (excluding vacant land sales) with a total of 151 transactions having a sale price over $3 million. Of these, 105 sales were between $3 million and $10 million, while 46 were over $10 million.
The lack of available stock together with buyer hesitation has resulted in the 2022 volume falling to 72 sales between $3 million and $10 million, and 20 sales for assets over $10 million.
The East and South regions continued to account for most large transactions in 2022. These two regions typically have superior transport links and services and have traditionally been the focus of major investors and the development of large transport and logistics facilities.