Beyond the broader challenges related to the interest rate environment, 2023 ended with below-average vacancy rates across the board. Face rents are still 60% higher than pre-pandemic levels, although recent growth rates have moderated.
Persistent underlying inflation, geopolitical shocks, and subsequent supply chain disruptions have continually altered the path to recovery.
However, as we move into 2024, investors are increasingly confident that moderating inflation will allow central banks to pivot to interest rate cuts this year. This has created a notable shift in sentiment, and price discovery is gathering momentum.
Interest rate stability and further pricing adjustment will help reduce the gap between buyer and seller expectations and fuel a recovery in investment market activity in 2024.
We are pleased to launch our latest Industrial Shed Briefing Spotlight report. This edition provides an overview of recent macro, leasing demand and investment trends across Australia's major industrial and logistics markets.
Key takeaways from the report:
- Rents continue to rise, albeit at a slower pace, as primary demand drivers sustain their resilience.
- Average vacancy increases slightly but remains low, with many markets still near or below 2.0%.
- Recent investor surveys indicate a growing preference for industrial real estate, driven by a convergence of structural and cyclical tailwinds.
- The outlook for interest rate stability is expected to spur recovery in investment activity in 2024.