Motorway access drives rental shift in Sydney’s industrial powerhouse market

Proximity to key transport routes is emerging as one of the key priorities for industrial occupiers, with new research showing each additional minute drive closer to a motorway equates to a 2.1% spike in rents.

CBRE’s latest ViewPoint ‘Time to motorway drives rental savings’ highlights the relationship between drive time to motorways in Western Sydney and gross rents.

An analysis of 375 industrial leases since 2014 in the Western Sydney area revealed that for each additional minute drive to a motorway, occupiers pay on average $3 per square metre more. As facilities move further from the motorway, rents dropped in all Western Sydney submarkets.

CBRE’s James Melville said the findings reflected the growing importance on supply chain efficiencies amid the increasing geographic division between consumption and production.

“Factories have become more specialised and separated from the warehousing and retail stages of the supply chain. This fragmentation has resulted in a greater importance of supply chain considerations on locational decisions,” Mr Melville said.

With transport costs typically a large share of an industrial operation’s cost base compared to rental costs, industrial occupiers can making savings by locating themselves nearer to key infrastructure.

“Many occupiers will pay a rental premium for more savings elsewhere in their supply chain, with accessibility being one of these key considerations,” Mr Melville explained.

“Much of Sydney’s large-scale warehousing logistics operations have shifted west towards precincts such as Eastern Creek, which have excellent access to the road network and, by extension, Sydney’s residents.”

Click here to read more about how close proximity to motorways is driving a spike in Sydney industrial rents.