Demand for leased industrial space in Cardiff and inner Newcastle improved in the six months to July despite vacancy rates increasing across NSW's second-biggest city, according to a report put together by Raine & Horne.
The latest Raine & Horne Industrial Average Index, produced by Raine & Horne Commercial Newcastle, found that vacancy rates in Cardiff fell from 6.34 per cent in January to 4.65 per cent while vacancies in the inner industrial precincts of Newcastle dipped from 6.73 per cent to 5.25 per cent.
It revealed that overall the July 2020 average, which measures available industrial floor space in Newcastle's major industrial suburbs, had risen to 7.7 per cent.
Steve Dick, director of Raine & Horne Commercial Newcastle and Index author, said the latest average was the most substantial six-monthly change since the launch of the Index in 2011.
While conceding the coronavirus pandemic was playing a part in higher industrial vacancies he said "at the height of the first lockdown, the wheels of industry continued to spin in Newcastle, and my team was highly active leasing and selling industrial property".
"Industrial turnover was enough to replace the loss of activity in the commercial office and retail sectors in the earlier months of COVID-19," Mr Dick said.
He noted, however, the number of coal ships moored off the Newcastle coast in May was an early indicator the coal price was under pressure, saying Newcastle's industrial leasing market was highly correlated to coal industry expenditure.
"As the coal price fell, it was like we had a new suburb springing up off the Newcastle coast as more coal ships arrived to wait their turn to load," Mr Dick said.
"The coal price is now 25 per cent lower than January 2020, which was 58 per cent off its July 2018 peak. The coal price is a significant metric as coal company spending is still the major driver of the industrial sector in Greater Newcastle, although not as substantial as a few years ago."
He said the declining dependence on coal explained falling vacancy rates in Newcastle's inner industrial precincts.
"Our inner industrial areas have some insulation from the direct effects of the coal industry as more leasing stock is being taken up by businesses supporting the residents living in the suburbs surrounding Newcastle's CBD," Mr Dick said. "Also, firms operating in the residential building industry are seeking more industrial space closer to Newcastle's centre."
The improved showing in Cardiff was mostly attributable to the opening of the road through to Boolaroo, which Mr Dick said had "improved demand for industrial space in southwestern Newcastle".