Industrial property juggernaut Goodman has forecast strong rental growth rates across its global portfolio based on the increasing demand for space from e-commerce suppliers to data storage operators, amid near-zero supply.
Given the land constraints in the high-density precincts of South Sydney and the inner ring areas of Melbourne, compounded by low supply, the only way to go is up – and that will underpin more vertical warehouse developments for Goodman.
The industrial sector is remaining strong amid concerns of any slowdown in consumer spending that may see less demand for storage facilities.
Going up: an artist’s impression of Goodman’s proposed multi-level Burrows estate in Alexandria, South Sydney.
Speaking at the interim results on Thursday, Goodman’s co-founder and chief executive Greg Goodman said the demand for industrial property across its portfolio had continued to attract capital partners, boosting its total assets under management (AUM) to $79.5 billion, up 17 per cent on the prior corresponding period.
That led to an increase in earnings guidance to 13.5 per cent in growth compared to the previous guidance of 11 per cent growth rate. For the half, the group delivered an operating profit of $877 million, up 11.5 per cent on the first half of same time last year.
“The ongoing growth in data storage is seeing data centres increasingly competing for space in our markets. The general economic outlook is uncertain, however our portfolio is in high demand, rents are growing, development activity and margins are healthy, and we continue to attract capital from our partners,” Goodman said.
He said that due to the demand and low supply, rents are heading north, and Australia and New Zealand rates are tipped to rise by around 25 per cent.
“We are seeing unprecedented rental growth in some of our markets and effectively zero vacancy,” he said.
In a new report on capital markets, CBRE’s head of industrial and logistics, Australia, Sass J-Baleh, said medium to long-term rent growth will remain elevated as Australia is in the early phase of a strong rental growth cycle, supported by a continued undersupply of floor space across most major markets.
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