South Sydney has become a hot bed of leasing and sales deals, as investors scour the inner city suburb for high yielding assets and tenancies.
The trigger has been the conversion of older office and warehouse space into residential, which has led to an under supply of commercial assets.
As a result of the demand, South Sydney's industrial region has recorded a decline in available space, reduced by 9452 square metres to 149,529 sqm, with a further 23,970 sqm currently under offer indicating further falls will be recorded in the coming quarter.
The recent storms across Sydney's south and out to the western area, which caused significant damage to warehouses, has also left tenants looking for short term accommodation.
As a result, any spare lower-grade space is now being leased.
Knight Frank's group director, head of research & consulting, Matt Whitby, said that although the South region has recorded a rise over the past year, the bulk of the increase has stemmed from tenant displacements, due to building sales for change of use purposes, such as new apartments.
"As such, underlying tenancy options are scarcer than the headline figure suggests and the past quarter results are encouraging," Mr Whitby said.
"The region that recorded the strongest rental growth in both the prime and secondary markets was the South region, where rezoning and change of use impacts are flowing through to tighter leasing markets and subsequent pressure on rental rates."
One area in demand is at Alexandria which is the emerging creative and commercial precinct, including the Goodman-owned Sydney Corporate Park, which is a mixed use estate, encompassing a diverse range of office, warehouse and retail businesses.
Purchased by Goodman in late 2013, there are more than 80 businesses located the park, including Range Rover, Harley Davidson, The Rocks Brewery, UFC Gym, In2Ski and Sky Zone Indoor Trampoline Park.
One of the latest tenant's to relocate to Sydney Corporate Park is Samios Plumbing, having relocated from William Street, Alexandria, to Building 1.85 O'Riordan Street Alexandria, on a ten year lease
Peta Antoniou, the leasing agent from Knight Frank who negotiated the lease, said it wouldn't be worth Samios Plumbing moving to a premises for less than 10 years due to moving costs, fit out costs and the goodwill of the business they would lose by moving out of Alexandria or to a premises offering shorter term leases.
Another example of tenants' displacement in the Alexandria/Waterloo area is the relocation of a high end furniture homewares company to a strata industrial unit at 888 Bourke Street Waterloo, by Peta Antoniou and John Swanson.
The new lease at Sydney Corporate Park comes as the owner, Goodman, reaffirms its forecast financial year 2015 earnings per security of 37.2cents , up 7 per cent on the previous year.
In its investor update, the group said the operational platform and strategy is providing significant financial and operational flexibility in future periods and the ability to deliver sustainable long-term earnings per security growth of 6 per cent per annum.
Goodman Group chief executive, Greg Goodman said sustained activity levels and the development momentum across Goodman's geographically diversified operating platform, combined with the consistent and disciplined execution of the business strategy are providing certainty and sustainability of earnings.
"Revaluation and cash flow contribution from Australian urban renewal pipeline is set to continue," Mr Goodman said.
"The Current pipeline of more than 35,000 apartments is anticipated to meaningfully increase over time. As at June 2015, $890 million of urban renewal sites now conditionally contracted in Sydney."
