339 & 349 Horsley Road, Milperra NSW
Yields eased slightly in Sydney’s industrial corridor over 2024, but the markets have shown overall resilience against global pressures, according to LJ Hooker Commercial.
Yields have softened 25 basis points to between 4.75%-5.75% in the second half of the year, according to the real estate group’s latest Industrial Market Monitor. The movement was not unexpected, with ongoing financial pressures of higher financing costs, inflationary pressures and the US Federal election prompting caution from investors.
Net face rents in the Central West suburbs experienced a slight increase moving from $220-$300/sqm in the first half of the year to $240-$300/sqm by H2 2024, driven by ongoing demand for high-quality industrial space. Meanwhile, the South West maintained stable rental levels at $180-$300/sqm
Supply pressures have kept rents even but the scheduled arrival of more than 200,000sqm of industrial next year – led by Charter Hall’s Minto developments at Airds (48,950sqm) and Culverston (42,000sqm) roads – will alleviate demand in 2025, returning balance to the marke that was last seen pre-Covid.
LJ Hooker Group’s Head of Commercial Tom Donnelly said industrial was still holding up well and remained the leading sector for performance.
“Industrial continues to be the standout property asset class,” he said.
“Investors appreciate the low risk of industrial but are showing more caution and consideration before purchasing.”
With 2025 introducing much-needed supply into the market, Mr Donnelly anticipated a flight to quality from many tenants.
“That said, business owners still want to keep a tight rein on their outgoings so we may see some attractive incentives offered in new developments.”
Mr Donnelly said the LJ Hooker Commercial network was still reporting healthy sales and leasing volumes, albeit at slower pace than a year earlier, as finance became more expensive and inflation has remained stubborn.
In the sub-3000sqm market, leases the Monitor found the transport, postal, and warehousing sector led leasing activity, representing 19.59% of total leases for spaces.
Storage for retail goods made up 18.81% of leasing activity and manufacturers accounted for 16.19% in the western Sydney markets.
The construction sector, which has been impacted by global material costs, accounted for 10.36%.
LJ Hooker Group Head of Research Mathew Tiller said markets were keenly watching how the Trump administration re-establishes itself in the global economy.
“Manufacturers in factories throughout Sydney’s West are waiting to hear how the President-elect's pledges on tariffs will play out,” said Mr Tiller.
Read more insights in our Sydney Industrial Market Report.
Share
