Warehouse tenants are bracing themselves for a rise in rents and demand in 2018, as the industrial property market is tipped to continue its star performance from 2017.

Sydney’s gross leasing activity in the first three quarters of 2017 hit 749,000 square metres, flying past the market’s typical 10-year annual average of 686,000 square metres, JLL data showed.

Melbourne and Brisbane’s leasing volumes are also close to exceeding the long-term averages.

Damien Cooley, from Cooley Auctions, said the industrial market was particularly strong over the year around the Alexandria area in Sydney’s inner south.

He noted the big challenge for the commercial real estate market next year would be the ability to access money.

“If banks continue to tighten lending policy then we might see a little bit of pressure in all sectors,” he said.

Ray White Commercial’s head of research Vanessa Rader agreed that restricted lending would have an impact on the market in 2018.

“More stringent lending criteria will likely result in dampened investment activity for secondary or higher-risk assets which have seen strong yield reduction over the past two years,” she said.

“The new year will see firm eyes on interest rates and, more broadly, the performance of the Australian economy.”

(Source: Alison Cheung, commercialestate.com.au, 18 Dec 2017)