Welcome to our Industrial Market Update for Q1 2022.

The industrial market continues to remain buoyant with strong tenant demand, low vacancies, and investors looking to park up capital. Commercial Realty have transacted over 32,000 sqm of space over this period. We are starting to notice some clouds on the horizon...

Many of our customers are operating with limited staff numbers as COVID-19 takes over, and puts the brakes on day-to-day operations and cuts into occupiers bottom line. While rents are firm across the market, rent review negotiations seem to be more intense as tenants start to hit the upper limit of their business cost inputs across the board. For those tenants who have rent reviews pegged to CPI, they will be experiencing unexpected increases. The Russian invasion of Ukraine will continue to put pressure on oil prices, reduce global growth and increase inflationary pressures at home and abroad. The CPI rate climbed to 5.9% in the December 2021 quarter and looks to trend even higher throughout 2022.

Uncertainty on all fronts is starting to make investors nervous on pricing investments, with the ANZ predicting the OCR to move by 1% - 2% by the middle of 2022. Are we going to see investment yields move by the same factor? The fear of missing out has certainly disappeared but there is still a lot of money chasing a small pool of investments. We know pricing is a factor of supply and demand, so more supply is needed if prices are to shift considerably. Time will tell...