Prospects improve for Newcastle
Sydney Morning Herald
Saturday March 27, 2010
THE Newcastle industrial market will continue to strengthen this year with firming yields and rising rents driving demand for industrial space, agents said.This will be boosted by growing port trade - mainly primary products but also other goods and services that need warehousing.The region has been hit by the economic downturn but a number of new developments, such as GPT's shopping centre, have reignited the business district.CB Richard Ellis's research manager, Luke Nixon, said despite weak industrial production in NSW in the past five years, the Newcastle area appeared to be the exception to the rule. He said a key factor that pointed to an increase in demand for industrial space in the region was the growth in trade tonnage from the Port of Newcastle: a rise, on average, of 3.5 per cent a year from 2005-09."Despite the financial crisis, growth was maintained as the port solidified its position as the largest export harbour for power station coal in the world," Mr Nixon said. "In 2009, trade from the port totalled 96 million tonnes. This type of industrial activity in the region provides a boost to the businesses that service the port."The expansion of the Newcastle industrial sector indicated continued demand for industrial space, which kept industrial production relatively stable in the region. Recently completed projects such as the port extension, the expansion of Orica's facility at Kooragang and the Westrac facility at Tomago would contribute to Newcastle's industrial sector expansion, Mr Nixon said.CBRE's Newcastle managing director, Angus Klem, said the December quarter results illustrated the industrial market was strengthening, with average capital values for industrial property returning to $886 a square metre, the highest level since the first quarter in 2008."Owner-occupiers and private investors are driving pricing levels in the region, with low interest rates and strengthening fundamentals attracting increased interest in the industrial sector," Mr Klem said. "Industrial sales improved during the second half of 2009 as credit restrictions began to ease and positive sentiment returned to the market. Investors are now competing for stock as investment yields are tightening after the historic lows ... during the last year."
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