COMMERCIAL PROPERTY, SALES & LEASINGCORONAVIRUS COVID-19 PANDEMICRESEARCH

Manufacturing demand soars as onshoring grows

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THE take-up of manufacturing facilities in the first half of 2021 have almost overtaken full year levels from 2020, as rising offshore wage and shipping costs support the argument for further onshoring of source materials and manufacturing processes.

According to the latest data from JLL Research, take-up of industrial space in the sector in the first half of the year has reached 496,200sqm, compared to 2020’s 510,560sqm for the full year.

“Over the past 18 months there has been in excess of $1 billion from 20 manufacturing facilities transacted nationally with some of the major corporates to transact including Arnott’s Biscuits, O-I Glass and Sara Lee” said Tony Iuliano, head of capital markets, industrial & logistics at JLL Australia.

If the current take-up rate keeps pace it is forecasted to surpass the 10-year average of just below 571,500sqm.

Manufacturing gross take up has been most pronounced in Melbourne in the first half, at 214,500sqm, followed by Sydney with 136,200sqm, Adelaide with 90,800sqm, Brisbane with 32,200sqm and Perth with 22,400sqm.

Melbourne’s rate was well above its 10 year average gross take up of 172,200sqm, like with Adelaide where the ten year average sits at 59,100.

Longer term macroeconomic themes are supporting the sector. Rising offshore wage and shipping costs support the argument for further onshoring of source materials and manufacturing processes,” said Annabel McFarlane, senior director of industrial research at JLL Australia.

GAM Steel has led the pack for warehouse space demand among manufacturing businesses at 59,700sqm, followed by Electrolux at 19,960sqm and Concept Architectural Systems at 13,500sqm.

Transport equipment manufacturing have also reported significant levels of take-up, with 42,000sqm over five deals.

Over the decade manufacturing businesses have been a major occupier type in all Australian industrial, making up 20% to 30% of take-up.

In the last ten years the sector has been the most dominant in Adelaide, representing 20% of all take-up, followed by Brisbane with 27% , Sydney with 23% and Melbourne with 22%. While in Perth the sector takes up just 15%.

“One of the notable sales this year included two Patties Foods manufacturing facilities within Victoria which sold for $141 million, bought by Charter Hall Direct Industrial Fund 4 on a 30 year sale and leaseback.  This sale included Patties Foods’ main production facility in Pakenham and the world’s largest pie manufacturing facility in Bairnsdale,” added Iuliano.

The sale of the combined site area of 27.2 hectares, includes 46,175 sqm of gross lettable area, with Patties has committing to 30-year triple net leases with fixed annual 3% reviews. 

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