1. travel
2. tourist destinations
3. australia and new zealand

Savills Research
South Australia
Spotlight
Adelaide Industrial
April 2015
Highlights
 A total of $329 million (>$1 million) of industrial


property sold in the 12 months to March 2015
Approximately 119,500 square metres were reported
leased from 50 transactions in the 12 months to
March 2015
Infrastructure projects including the $896 million
South Road upgrade from Torrens Rd to the River
Torrens are set to improve transport in and around
the key industrial precincts
 Net rents in the North West remain stable ranging


from $70 to $110 per square metre for prime stock
Prime grade land values in the Inner West range from
$300 to $400 per square metre for sites up to 5,000
square metres
The outlook for Adelaide’s industrial sector for 2015
remains mixed. Sales in the lower price bracket (<$5
million) are likely to remain strong in the short term
Savills Research | Adelaide Industrial
April 2015
Savills South Australia Team
Research
Managing Director
National Head
Tony Crabb
+61 (0) 3 8686 8012
Managing Director
Rino Carpinelli
+61 (0) 8 8237 5005
tcrabb@savills.com.au
rcarpinelli@savills.com.au
Industrial Sales
Industrial Leasing
Divisional Director
Steve Bobridge
+61 (0) 8 8237 5015
Manager
Geoff Shuttleworth
+61 (0) 8 8237 5017
sbobridge@savills.com.au
gshuttleworth@savills.com.au
Valuation & Consultancy
Property Management
Divisional Director
Alastair Johnston
+61 (0) 8 8237 5041
Associate Director
Jeffrey Klaebe
+61 (0) 8 8237 5018
acjohnston@savills.com.au
jklaebe@savills.com.au
Project Services
Divisional Director
Steve Christodoulou
+61 (0) 8 8237 5004
schristodoulou@savills.com.au
Savills South Australia
Level 2, 50 Hindmarsh Square
Adelaide, SA 5000 Australia
+61 (0) 8 8237 5000
savills.com.au
savills.com.au/research
2
Savills Research | Adelaide Industrial
April 2015
Introduction
Adelaide’s industrial property market showed mixed results in the 12 months to March
2015. Industrial leasing demand decreased over the period, with total space leased down
by 43,419 square metres on the corresponding period in 2014. In contrast industrial sales
increased over the preceding 12 month period, up by $109 million. Adelaide’s industrial
sector is experiencing a time of great change as commodity prices fall, future defence
industry contracts await decisions and several large manufacturing operations prepare to
leave. The 25 percent fall in the Australian dollar against the US dollar is providing
significant support to South Australia. Further falls will continue to be positive.
Throughout this document the Adelaide industrial market will be referred to in five main
precincts being the Inner West, North, North West, South and South West. These precincts
are recorded below.
Precinct
Suburbs
Inner West
Beverley, Thebarton, Adelaide Airport, Hindmarsh
North
Edinburgh, Burton, Salisbury, Direk, Penfield
North West
Regency Park, Wingfield, Port Adelaide, Gillman, Dry Creek
South
Lonsdale, Seaford
South West
Edwardstown, Plympton
Source: Savills Research
Infrastructure
A number of infrastructure
projects are recently
completed or are currently
underway throughout South
Australia. In particular the
South Australian
Government is focused on
improving the main road
transport corridor through
Adelaide from north to
south.
Work on the $812 million
South Road Superway
recently finished with the
elevated roadway and final
works now complete. The
Superway extends 2.8
kilometres from the Port
River Expressway to
Regency Road. The
roadway opened in March
2014 and associated works
completed shortly
thereafter.
A further upgrade to the
South Road corridor was
announced in mid 2014. The
3.7 kilometre section of
South Road from Torrens
Road to the River Torrens
has been earmarked for the
next stage of the upgrade,
and is proposed to include a
1.4 kilometre non-stop
section of road. Estimated
cost of the project is in the
region of $896 million.
in the state, with both
passenger and freight
projects underway. One of
the largest recent projects is
the Seaford rail extension.
The project comprises a
new 5.7 kilometre section of
passenger rail from
Noarlunga Centre to the
Seaford district centre, and
includes a 1.2 kilometre rail
bridge spanning the
Onkaparinga Valley.
Work also continues on the
Southern Expressway
duplication project. Now
recently complete, the
expressway allows for two
way traffic at all times of the
day from Bedford Park to
Old Noarlunga.
Outside the metropolitan
area several infrastructure
projects are also underway,
predominantly to support
mining activities in the
State’s north. One of the
larger planned projects is
the Port Bonython deep sea
port. Situated 35km northeast of Whyalla, the new
port is intended to handle
Focus has also turned to
improving rail infrastructure
‘Capesize’ ships
capable of carrying
180,000 tonnes of
cargo. The new
facility is expected
to be complete by
2016 and have an
estimated cost in
the region of $600
million.
This combination of
infrastructure
projects is expected
to improve logistics
in Adelaide
significantly, and
also highlight South
Australia as a key
national transport
hub.
savills.com.au/research
3
Savills Research | Adelaide Industrial
April 2015
Leasing Activity
Savills monitors reported industrial leasing activity of properties over 700 square metres of
GLA. A total of 119,482 square metres of industrial space has been reported leased from 50
deals in the 12 months to March 2015. The previous corresponding period by comparison
recorded a total of 162,901 square metres of stock reported leased from 53 deals.
The table below details major leasing deals reported in the 12 months to March 2015.
Select Adelaide Industrial Leases to March 2015
Rent
Date
Property
GLA
(sq m)
($/sq m)
Oct-14
5-17 Taminga St, Regency Park
1,930
68 G
Oct-14
10-14 Millers Rd, Wingfield
1,198
92
ASTM Pipe Sales
Dec-14
20-22 Tikalara St, Regency Park
2,113
83
Transline
Dec-14
182 Cormack Rd, Wingfield
1,540
78
Concrete Formwork
Dec-14
82-86 Woomera Ave, Edinburgh
1,072
65
Hunt Energy
Dec-14
159-161 Richmond Rd, Richmond
1,004
105
Undisclosed
Feb-15
18-20 Carsten Rd, Gepps Cross
1,473
68
Undisclosed
Feb-15
33 Cormack Rd, Wingfield
1,250
77
Undisclosed
Feb-15
70 Woomera Ave, Edinburgh
1,320
60
Undisclosed
Feb-15
9-11 William St, Mile End
1,150
105
Undisclosed
Tenant
Adelaide Contract W’housing
Source: Savills Research
Leases in the wholesale occupier sector made up the bulk of Adelaide’s reported industrial
leasing activity over the last 12 months, accounting for 54,007 square metres of space
reported leased. The sector also had the most number of leasing deals with 25 or 50
percent of the market.
The North West and Inner West sectors of the Adelaide industrial market recorded an
increase in leasing activity over the previous 12 month period. The Northern industrial
precinct was down with the North showing a decrease in leasing activity of 25 percent to
22,203 square metres of leasing activity across 12 deals.
Recent leasing activity in the Inner West and North West precincts has predominantly
consisted of smaller office warehouse type facilities. In the 12 months to March 2015 Savills
recorded approximately 36 percent of all leasing transactions in the Inner West took place in
the sub-2,000 square metre segment. Leasing activity across all precincts in this segment of
the market has remained relatively strong in recent times. While larger tenant demand has
fluctuated it is anticipated that smaller leases will continue to make up the majority of
leasing activity.
savills.com.au/research
4
Savills Research | Adelaide Industrial
Direct leases accounted for
the majority of reported
industrial transactions in the
12 months to March 2015
with 102,682 square metres
or 86 percent of the market.
The remaining 16,800
square metres of stock
reported leased were
renewals. While precommitments began to
account for a larger
proportion of the market in
2012 and 2013, just two
were recorded in 2014 and
over the last 12 months no
industrial pre-commitments
were recorded.
In the 12 months to March
2015 Savills recorded the
largest volume of industrial
leasing activity in the sub
2,000 square metre
category, with a total of
41,895 square metres
reported leased. This was
followed by the >10,000
square metre category
which reported 31,800
square metres leased. The
greatest number of leasing
transactions over the period
was also recorded in the
sub 2,000 square metre
category, accounting for 72
percent of all transactions.
April 2015
Adelaide Industrial
Metropolitan Leases by Lease Type (sq m)
Mar-05 to Mar-15
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Direct
Precommit
Source: Savills Research
Adelaide Industrial
Metropolitan Leases by Lease Size (sq m)
Mar-05 to Mar-15
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
< 2,000
2,000 - 5,000
5,000 - 10,000
10,000 - 15,000
> 15,000
Source: Savills Research
Net rents for prime industrial
space as at March 2015
typically ranged from $80 to
$140 per square metre per
annum for industrial
buildings in the Inner West,
and between $70 and $110
per square metre per annum
net for industrial buildings in
the North West. Net rents in
the South West ranged
between $75 and $125 per
square metre per annum
and $60 to $85 per square
metre per annum in the
North.
Adelaide Industrial
Average Prime Net Face Rents by Precinct ($/sq m)
Mar-05 to Mar-15
$120
$100
$80
$60
$40
$20
$0
Inner West
North West
North
Source: Savills Research
savills.com.au/research
5
Savills Research | Adelaide Industrial
April 2015
Sales Activity
Savills monitors reported industrial sales activity of properties with a sale price greater than
$1 million. Savills recorded approximately $329 million worth of reported industrial property
transactions in the 12 months to March 2015. This shows an increase of $109 million on the
$218 million recorded in the previous 12 months to March 2014 and also an increase on the
historical five year average of $236 million.
In the 12 months to March 2015, 57 properties transacted, down from the previous 12
month total of 55, and down on the five year average of 66. The chart below graphically
illustrates this level of activity by year.
Sales within the price range
greater than $30 million
made up the majority of
recorded transactions over
the last 12 months, totalling
approximately 56 percent of
all sales activity. This
translated into $183 million
of transactions in the upper
price bracket.
The last 12 months saw the
number of transactions
remain broadly the same at
55 versus 57. Sales volumes
have been strong in the
years following the GFC and
2014 saw a firm
continuation of this trend.
Adelaide Industrial
Metropolitan Industrial Sales ($m and number)
(>$1m) Mar-05 to Mar-15
$600
100
90
$500
80
70
$400
60
$300
50
40
$200
30
20
$100
10
$0
0
Sales >$1m (LHS)
Sales No (RHS)
Source: Savills Research
Sales volumes below $10 million continue to be a prominent part industrial market activity,
with 53 transactions accounting for $120 million worth of sales recorded over the last 12
months. Traditionally, there has been a significant difference between the lower and higher
end sales volumes reflecting strong demand for smaller scale investment opportunities by
local private investors and owner occupiers. Although there has been a rise in interest from
institutional investors during the last 12 months, there remains limited opportunity to satisfy
this demand. Hence private investors and owner occupiers are expected to remain as the
predominant buyer groups over the medium term.
Adelaide Industrial Land Values <5,000 sq m ($/sq m) Mar-15
Grade
Inner West
North West
North
South West
South
Prime
300 – 400
225 – 275
75 – 110
400 – 500
75 – 120
Secondary
200 – 250
125 – 175
60 – 80
200 – 300
60 – 80
Source: Savills Research
Industrial land values remained steady in the 12 months to March 2015, with a limited
number transactions taking place in the last 12 months. Prime grade land values for
industrial sites in the South West currently range from $400 to $500 per square metre, with
the Inner West ranging between $300 and $400 per square metre. Land values in the North
currently range from $75 to $110 per square metre for prime sites, and $60 to $80 for
secondary locations.
savills.com.au/research
6
Savills Research | Adelaide Industrial
April 2015
Industrial sales in the North and Inner West precincts both increased during the last 12
months compared with the previous period, to $212 million and $56 million respectively.
Sales in the North and North West had the greatest number of transactions accounting for
63 percent of all sales recorded. Sales in the North West were below the same level of
preceding 12 month period.
The following tables highlight a selection of industrial sales for the 12 months to March
2015.
Select Adelaide Industrial Investment Sales to March 2015
Date
Property
Price ($m)
GLA (sq m)
$/sq m
Yield (%)
May-14
Netley Commercial Park
30.25
34,260
883
7.92
Jun-14
113 Ledger Rd, Beverley
7.33
Jun-14
Lots 6 & 8 Sturton Rd, Edinburgh
153.00
8,744
838
11.32
67,947
2,252
7.40
Aug-14
103-109 West Ave, Edinburgh
14.75
5,980
2,467
7.50
Aug-14
146-148 Francis Rd, Wingfield
2.83
1,200
2,358
16.71
Nov-14
34-44 Jonal Dve, Cavan
10.20
8,232
1,239
na
Jan-15
6 Sheffield St, Woodville North
2.75
12,271
224
4.36*
Price ($m)
GLA (sq m)
$/sq m
Source: Savills Research
* part occupied
Select Adelaide Industrial Vacant Possession Sales to March 2015
Date
Property
Jun-14
5-17 Taminga St, Regency Park
9.00
17,150
525
Jun-14
9-17 Tikalara St, Regency Park
3.90
4,638
841
Jun-14
5 Kenilworth Ave, Edwardstown
1.08
1,377
784
Oct-14
5-9 Woomera Ave, Edinburgh Parks
4.50
10,580
425
Oct-14
60-62 Kinkaid Ave, North Plympton
3.50
5,857
598
Dec-14
79 South Terrace, Wingfield
2.37
3,305
716
Jan-15
585 South Rd, Regency Park
2.06
2,113
975
Jan-15
24 Diagonal Rd, Pooraka
2.35
1,980
1,187
Price ($m)
Area (sq m)
$/sq m
Source: Savills Research
Select Adelaide Industrial Land Sales to March 2015
Date
Property
Apr-14
32-38 Kaurna Ave, Edinburgh Parks
1.38
21,790
63
Jun-14
Lot 11 Port Wakefield Rd, Gepps Cross
2.80
20,000
140
Source: Savills Research
savills.com.au/research
7
Savills Research | Adelaide Industrial
April 2015
The industrial buyer mix has
remained relatively stable
over the last 12 months.
Institutional investors
accounted for the majority
of purchases with $193
million worth or 59 percent
of the market. This is up on
the 23 percent they
accounted for in the
previous year. The syndicate
category increased its share
of the market, accounting
for around 9 percent.
Funds had the largest
increase in buyer share over
the last 12 months, due to
the sale of two assets to
Mirvac and Charter Hall
respectively. Funds had
remained largely absent
from the Adelaide market
since the GFC, however
with four purchases in the
last two years they are
beginning to make a return
to the Adelaide market.
Funds were the most active
vendor group in the last 12
months accounting for 48
percent of stock sold.
Private investors recorded
the most sales transactions
(23).
Market yields for prime
industrial buildings in the
Inner West were steady in
the March 2015 quarter,
currently ranging between
8.00 and 8.75 percent.
Yields were also steady in
the North West and the
South West over the last 12
months, ranging between
8.25 and 9.00 percent.
Average prime capital
values have increased in the
Inner West over the last 12
months. The Inner West,
North and North West
showed a slight increase
reflecting relatively strong
sales activity and buyer
demand for prime grade
properties in these
precincts.
Adelaide Industrial
Metropolitan Industrial Sales Buyer Profile (%)
(>$1m) 12 months to Mar-15
Private Investor
23%
Developer
2%
Fund
47%
Syndicate
9%
Owner Occupier
10%
Source: Savills Research
Trust
3%
Undisclosed
6%
Adelaide Industrial
Average Prime Market Yields by Precinct (%)
Mar-05 to Mar-15
10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
Inner West
Source: Savills Research
North West
North
Adelaide Industrial
Average Prime Capital Values by Precinct ($/sq m)
Mar-05 to Mar-15
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
Inner West
North West
North
Source: Savills Research
savills.com.au/research
8
Savills Research | Adelaide Industrial
April 2015
Key Market Indicators – March 2015
Inner West
Prime
Secondary
Low
High
Low
High
80
140
50
80
Yield- Market (%)
8.00
8.75
8.75
10.00
IRR (%)
9.50
10.25
10.25
11.50
Outgoings – Total ($/sq m)
12
15
10
12
Capital Values ($/sq m)
900
1,700
500
900
Land Values 3,000 – 5,000 sq m ($/sq m)
300
400
200
250
Rental Net Effective ($/sq m)
North West
Prime
Secondary
Low
High
Low
High
70
110
50
70
Yield- Market (%)
8.25
9.00
9.00
10.00
IRR (%)
9.75
10.50
10.50
11.50
Outgoings – Total ($/sq m)
12
15
10
12
Capital Values ($/sq m)
720
1,300
500
780
Land Values 3,000 – 5,000 sq m ($/sq m)
225
275
125
175
Rental Net Effective ($/sq m)
North
Prime
Secondary
Low
High
Low
High
60
85
40
60
Yield- Market (%)
8.50
9.50
9.50
10.50
IRR (%)
10.00
10.75
11.00
11.75
Outgoings – Total ($/sq m)
12
15
10
12
Capital Values ($/sq m)
650
1,000
380
630
Land Values 3,000 – 5,000 sq m ($/sq m)
75
110
60
80
Rental Net Effective ($/sq m)
South West
Prime
Secondary
Low
High
Low
High
75
125
50
80
Yield- Market (%)
8.25
9.00
9.00
10.00
IRR (%)
9.50
10.50
10.50
11.50
Rental Net Effective ($/sq m)
Outgoings – Total ($/sq m)
12
15
10
12
Capital Values ($/sq m)
830
1,565
500
890
Land Values 3,000 – 5,000 sq m ($/sq m)
400
500
200
300
South
Prime
Secondary
Low
High
Low
High
60
90
45
80
Yield- Market (%)
9.00
10.00
10.00
11.00
IRR (%)
10.50
11.50
11.50
11.75
Outgoings – Total ($/sq m)
12
15
10
12
Capital Values ($/sq m)
600
1,000
410
800
Land Values 3,000 – 5,000 sq m ($/sq m)
75
120
60
80
Rental Net Effective ($/sq m)
Source: Savills Research
savills.com.au/research
9
Savills Research | Adelaide Industrial
April 2015
Outlook
The 12 months to March 2015 ended with mixed results for the Adelaide industrial market,
with a decrease in overall leasing and an increase in sales transactions on the 12 months to
March 2014.
Reported industrial leasing activity fell in the 12 months to march 2015, down by
approximately 25 percent on the preceding period. Some tenants have taken the
opportunity to move into new premises in anticipation of improving economic conditions,
while others have been happy to remain and consolidate their holdings. The North and
North West precincts have dominated recent leasing activity, with most deals taking place
in existing premises. Pre-commitment leases tailed off during the last 12 months but are
expected to return with an increase in construction of new facilities. Savills expect the
number of leasing deals to remain steady in the short term while the economy continues to
recover, increasing in the medium term as a larger number of tenants return to the market.
Reported industrial sales increased in the 12 months to March 2015 on the back of slightly
weaker sales in the prior twelve months. Sales activity was bolstered by large institutional
transactions in the greater than $30 million price bracket. In the range of $15 million to $30
million no sales were recorded. Smaller buyer groups under $5 million such as owner
occupiers remain active in the market. A lack of properties being offered for sale in the
higher price brackets has resulted in limited activity from larger buyer groups in the market.
The North and North West precincts are expected to drive the majority of future sales and
leasing activity, particularly due to improvements to infrastructure in the area. Southern
industrial areas should also benefit from infrastructure projects such as the Southern
Expressway and improvements to the north-south corridor through Adelaide.
In the short term additional design and construct developments across the metropolitan
area are expected to remain at a similar level to the last 12 months. Over the medium to
long term, announcements in the Defence and Mining sectors, population growth and
improved public infrastructure are predicted to influence growth for the South Australian
industrial market. Savills expect the State’s industrial market will be well positioned to
compete for the interest of investors both locally and nationally in the future, with a stable
long term outlook and potential for substantial income returns.
savills.com.au/research
10
Savills Research | Adelaide Industrial
April 2015
Savills Research Team
Our highly regarded research
divisions are dedicated to
understanding and giving indepth insight into the
commercial, industrial & retail
markets throughout Australia.
We also provide in-depth
consultancy services, ranging
from tenant representation to
property site selection for
multinational businesses.
Our research teams are
highly qualified real estate
professionals with
comprehensive knowledge of
property markets across
Australia.
The Savills Research &
Consultancy team has years
of experience, and supported
by our extensive agency,
property management and
valuation professionals, are
highly regarded and
respected along with Savills
Research teams across the
globe.
For our latest reports, contact one of the
team or visit savills.com.au/research
National Head of Research
Tony Crabb
+61 (0) 3 8686 8012
tcrabb@savills.com.au
Savills provide free research
reports on all major property
markets, and some example
papers include:
 Office Markets
 Retail Markets
 Residential Trends
 Industrial Markets
 International Markets
Download the
Savills iPad App
for insights at
your fingertips
This information is general information only and is subject to change without notice. No representations or warranties of any nature whatsoever
are given, intended or implied. Savills will not be liable for any omissions or errors. Savills will not be liable, including for negligence, for any direct,
indirect, special, incidental or consequential losses or damages arising out of our in any way connected with use of any of this information. This
information does not form part of or constitute an offer or contract. You should rely on your own enquiries about the accuracy of any information
or materials. All images are only for illustrative purposes. This information must not be copied, reproduced or distributed without the prior written
consent of Savills.
savills.com.au/research
11
With a rich heritage and a reputation for excellence that dates
back to 1855, Savills is a leading global real estate provider
listed on the London Stock Exchange.
Savills advises corporate, institutional
and private clients, seeking to acquire,
lease, develop or realise the value of
prime residential and commercial
property across the world’s key
markets.
Savills is a company that leads rather
than follows with over 600 offices and
associates throughout the UK, Europe,
Americas, Asia Pacific, Africa and the
Middle East. With over 27,000 staff, we
seek out people who possess that rare
mix of entrepreneurial flair and rock
solid integrity, and are focused on
delivering clients with advice and
expertise of the highest calibre.
A powerful combination of global
connections and deep local knowledge
provides Savills with an almost
unparalleled ability to connect people
and property.
Savills extensive Asia Pacific network
spans 50 offices throughout Australia,
New Zealand, China, Hong Kong, India,
Indonesia, Japan, Korea, Macao,
Malaysia, Myanmar, Philippines,
Singapore, Taiwan, Thailand and
Vietnam.
Adelaide
Brisbane
Canberra
Gold Coast
Melbourne
Notting Hill
Parramatta
Perth
Sunshine Coast
Sydney
+61 (0) 8 8237 5000
+61 (0) 7 3221 8355
+61 (0) 2 6221 8200
+61 (0) 7 5509 1700
+61 (0) 3 8686 8000
+61 (0) 3 9554 5100
+61 (0) 2 9761 1333
+61 (0) 8 9488 4111
+61 (0) 7 5313 7500
+61 (0) 2 8215 8888
In Australia, we offer the full
spectrum of services from
providing strategic advice to
managing assets and projects and
transacting deals. With a firmly
embedded corporate culture that
values initiative, innovation and
integrity, clients receive
outstanding service and can be
assured of the utmost
professionalism.
Contact Savills for advice on
all aspects of property:
 Sales
 Leasing
 Valuations
 Asset Management
 Project Management
 Strategic Corporate Real Estate
 Property Accounting
 Facilities Management
 Residential Luxury Sales
 Residential Projects
 Research