Projected figures for 2007 show strong supply in Sydney and Brisbane. In Melbourne and Perth, 2007 supply will exceed historical averages. The impetus for higher supply levels is increased demand from the development of transport-based infrastructure, distribution companies rationalising operations and higher import levels creating demand for major warehousing facilities. Companies in the resources and support services sectors are also requiring additional industrial floor space for warehousing, industrial estates and high tech/research and development facilities.

In Sydney, projected supply is expected to reach a 17-year peak in 2007. Even at this level, it is only 20% above long-term demand.

Despite 10 years of relatively strong consecutive growth in supply, annual gross absorption has continued to outstrip annual supply on average by 1.3 times. Currently, around half of the projected 2007 supply is pre-committed.

Investors consider the Sydney market to be a strong and reliable asset class. According to the Property Council of Australia's index, over the five years the Sydney industrial market has returned 12.7% including the out performing a wide range of asset classes including the retail sector. This enhances the investment attraction of industrial property.

Investor interest in the Sydney industrial market has remained strong as investment returns continue at a relatively attractive level. A shortage of investment stock reaching the market has continued to put pressure on yields, while capital values have increased.

Brookvale

The Brookvale industrial estate is arguably the premier industrial estate on the northern beaches peninsula and whilst there has been a considerable amount of sales activity in the area over the past 12 months, the are is still described as tightly held with most of the sales activity related to owner - occupier purchases. Brookvale can be described as fully developed (i.e., fully constrained by land availability), however a number of the properties accommodate improvements now considered obsolete and these are being demolished to satisfy the growing demand for smaller office and office/warehouse strata units for owner occupiers.

On balance the Brookvale industrial area is considered one of the more stable industrial areas on Sydney's North Shore.