“We forecast an annual average growth rate in national rents to be approximately 6.5 per annum between now and 2026, with the strongest rent forecasts in the Sydney market,” Ms Sass J-Baleh said.
The surge in valuations has been highlighted in the interim and annual results posted by listed players Goodman Group, Charter Hall, Centuria Industrial REIT and Dexus all of whom have booked massive increases in the value of their industrial property books.
These same groups, along with likes of Pan-Asian giants ESR, Logos and Frasers, are also investing billions in developing new state-of-the-art automated logistics facilities for clients such as Amazon, Coles and Woolworths.
Forecasts that the investable industrial property universe will exceed office by 2026 follows another “changing of the guard” moment last year when returns – or yields – on prime warehouses fell below those for top CBD office towers for the first time (4.75 per cent versus 5 per cent) a reflection of the weight of capital seeking to increase its exposure to logistics and a lack of supply to meet that investment demand.
The decline in the cumulative value of retail property relative to industrial property has been underway for some time due to the rise of Amazon and other online giants at the expense of people going to shopping malls.
This was reflected in Australia when Goodman Group’s market valuation surpassed that of Westfield owner Scentre Group in January 2019.
That gap has since widened massively with Goodman valued at $36.3 billion (it was as high $49.5 billion at its market peak in December 2021) while Scentre Group is worth less than half that at $14.9 billion.
Dexus, the country’s biggest listed owner of office property (as well as industrial and other commercial assets) has a market cap of $11.5 billion.