Institutional investors have been seeking increased exposure to industrial real estate — what has been the impact on the risk profile of industrial assets?
Insight
07 December 2020
Changing risk in Australia’s industrial landscape
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Source: JLL Research as at 3Q20
One of the driving forces behind the capital shift towards the industrial and logistics sector is the relatively strong risk-adjusted performance of the sector through the current cycle. Most notably, through the current economic downturn, the volatility of returns has remained relatively low and has avoided the uptick, seen in the retail and, albeit to a lesser extent, office markets.
This stability has been underpinned by two key drivers. Firstly, the sector has continued to see elevated occupier activity across most of our tracked markets – with gross take-up of 54% and 4% above the 10-year quarterly average in 2Q20 and 3Q20, respectively. Also, underlying demand and structural changes have supported rental collection for industrial assets, which managed to avoid the decline in collections seen in the retail market.
Figure 2: Historical commercial property sector volatility (5-year rolling average)
