Industrial Leasing Market Update

The industrial property market in the Newcastle region is currently experiencing a period of growth, with rental rates expected to increase sharply over the next 12-24 months. This trend is in line with the national market, which has also seen an increase in industrial rental rates over the past few years.

One of the key factors contributing to the growth of the industrial property market in Newcastle is the low vacancy rates in most prime industrial areas. This means that there is a strong demand for industrial properties in these areas, which in turn is driving up rental rates. As a result, property owners and investors are finding it increasingly profitable to invest in the industrial property market in Newcastle.

Another factor contributing to the growth of the industrial property market in Newcastle is the increase in land prices and construction costs over the last 24 months. Land prices in the region have increased by between 100 percent and 200 percent, while construction costs have increased by approximately 40 percent. This has made it more expensive to build new industrial properties in the region, which has in turn put upward pressure on rental rates. Average rental rates for a modern 1000 sqm current site is approximately $160 to $180/sqm, per annum.  New developments are expected to exceed $200/sqm per annum net plus GST within the next 6 months. The higher interest rate environment is also expected to generate more leasing enquiries in the industrial property market in Newcastle. As interest rates rise, businesses are likely to be more cautious about taking out loans to purchase industrial properties, which means that leasing becomes a more attractive option. This is likely to further increase demand for industrial rental properties in the region.

There are several key sectors and businesses that are currently active and driving the demand in the industrial property market in Newcastle. One of the most active sectors is mining services, as the region is home to a number of mining operations. There is also strong demand from the renewable energy sector, as companies look to invest in solar and wind energy infrastructure. Ecommerce-related warehouse and distribution businesses are also driving demand in the industrial property market in Newcastle. With the rise of online shopping, there is an increased need for warehousing and distribution facilities to handle the increased volume of goods being shipped. This has created opportunities for property owners and investors in the industrial property market. Other sectors that are active in the industrial property market in Newcastle include transport (including courier and parcel delivery services), health and fitness gyms, and construction and trade businesses. These sectors are all experiencing growth and expansion, which is driving demand for industrial properties in the region.

With several key sectors driving demand for industrial properties in the region, there are opportunities for property owners and investors to capitalise on this trend and achieve strong returns on their investments.

View our current industrial property opportunities here.