Industrial Space To Top Million Mark
Sydney Morning Herald
Saturday September 13, 2008
A RECORD amount of industrial space will be completed in Sydney this year according to new CB Richard Ellis forecasts which tip new construction will break through the million-square-metre barrier for the first time.
CBRE's recent Sydney Industrial MarketView reports 384,000 sqm of industrial construction was completed in the first half of this year. A further 740,000 sqm is under construction and due to be completed by year end, despite the impact of the credit crunch, which has reduced the equity available for speculative development projects.The bulk of the new supply is slated for the outer west in areas such as Erskine Park and Eastern Creek. Over the past five years, floor space in this precinct has increased by a factor of nine as the M7 and other surrounding infrastructure has taken shape, according to CBRE's research manager, Luke Nixon.The report tips the outer-west subregion will shoulder nearly 70 per cent of the forecast new industrial supply for Sydney, a trend which will limit future rental growth in the area over the short term.On the flipside, development projects in South Sydney are having the industrial lettable area minimised in favour of office space.Other development trends noted in the report include a move by developers to provide more adaptable industrial space which can be subdivided to suit a broader range of tenants.But while new space is entering the market, the national construction industry continued to decline in August.But the rate of contraction did moderate for a third consecutive month, with the Australian Industry Group Housing Industry Association Performance of Construction Index (Australian PCI) registering 43.1 points, still below the key 50-point level separating expansion from contraction.The Australian PCI is a seasonally adjusted national composite index. A reading above 50 points indicates construction activity is generally expanding; below 50 shows it is declining.Tony Pensabene, associate director economics and research with Australian Industry Group (Ai Group), said that demand for construction projects was continuing to be hit by tight credit availability, as well as the impact of weak investor and consumer confidence."Nevertheless, we are seeing early signs that the industry has passed a low point in the current cycle, with the rate of decline in activity moderating for a third straight month, with notable support in August coming from a lift in commercial construction," he said.
© 2008 Sydney Morning Herald