Increased activity in Gold Coast industrial market

May 04, 2012 | Industrial | Research | Commercial

Increased enquiry for industrial property on the Gold Coast is converting to an increase in leasing and sales volumes, according to the latest Colliers International Gold Coast Industrial Research and Forecast Report.

Pat Cavanagh, Colliers International Gold Coast Industrial Director, said the uplift in activity over the first quarter of 2012 has continued on from a positive last quarter of 2011.  

“Both tenants and buyers are actively seeking to take advantage of the current market conditions and secure leases or purchase property at reduced rates while significant savings are available,” he said.

“Tenants from a wide array of industries are on the move and are consolidating, downsizing, relocating and in many cases, expanding, at leasing rates around 20 to 30 per cent less than they were previously outlaying.  

“In terms of buyers, current market conditions are seeing owner-occupiers make a comeback and take advantage of lower price points as more distressed assets come on to the market.

“Investors are circling the market and are eager to pounce on quality assets when they reach the market, however there is a shortage of good quality industrial investments available fitting the criteria of strong leases, modern buildings, rental growth and depreciation benefits.”  

Mr Cavanagh said there were particularly strong enquiry levels for industrial property in the Gold Coast’s Central Precinct – in particular, the suburbs of Southport, Ashmore, Molendinar, Arundel and Helensvale.

“Over the past six months there have been several significant sales achieved within the Central Precinct, including a 6000sq m warehouse at Mercantile Court in Molendinar that sold for $6 million and a property on Heslop Road in Gaven that reportedly sold for $4.5 million,” he said.  

“On top of this there have been a multitude of smaller strata sales and leases.”

While there have been increased enquiry levels in the Central Precinct’s industrial market, Mr Cavanagh also said rental values and capital values have remained steady.  

“This primarily due to the large amount of existing stock which has been sitting idle for periods of 12 months or more,” he said.

“The increased enquiry is resulting in a take-up of this existing stock and will not result in an uplift of rents or capital values until the supply and demand equation starts to change.  

“We are confident we may see evidence of this change in the market as confidence continues to return and large-scale infrastructure projects commence over the next two years.”

Lynda Campbell, Colliers International Research Manager, further added that the first few months of 2012 had also seen activity within the industrial areas of the Gold Coast’s Southern Precinct – which includes the suburbs of Carrara, Burleigh Heads and Currumbin - lift, with increased enquiry resulting in sales and leases in the area.  

Ms Campbell said there had been a lack of new industrial development over the past few years, with tenants and owners taking advantage of better value that is on offer through existing stock and that was now leading to a shortage of new supply, particularly of larger factory/warehouses in the Central and Southern Precincts of the Gold Coast.

“The majority of projects we have identified as being under construction will be completed during 2012, leaving very little new industrial development in the pipeline,” she said.

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