In a market driven by new modern facilities, institutional owners are investing into existing portfolios in order to compete
Brisbane is undergoing a warehouse refurbishment boom, as larger and older logistics centres struggle for relevance in a market that is driven by new construction in emerging precincts offered at competitive rentals.
According to Anthony White, Director of Industrial at Colliers International, institutional owners are investing heavily in their existing portfolios. “These owners are looking to attract new tenants to their buildings following existing tenants vacating, sometimes after leases which are on a term of 20 years or more.
“Brisbane Airport Corporation is in the final stages of completing a substantial refurbishment of a 26,912sqm distribution centre at 51 – 57 Qantas Drive, which has yielded immediate results.
“Following a 21,912sqm commitment by GPC Australia, Brisbane Airport Corporation undertook a substantial refurbishment which included a full fire sprinkling upgrade, an office extension and refurbishment and an external cosmetic refurbishment.
“This strategy yielded immediate results, with national fitout company Mills Display agreeing to lease the balance 5,000sqm tenancy just prior to Christmas.
“We believe this is only the beginning of a refurbishment cycle and that many owners will need to consider how their buildings function to suit modern tenants’ requirements,” said Mr White. “Efficient truck access, undercover loading areas and quality fire and building management systems will be demanded by tenants as the design and construct market offers brand new buildings at competitive rentals.”
John Tormey, General Manager Commercial Businesses at Brisbane Airport Corporation acknowledged the need to tailor the Airport’s property portfolio to meet the specific needs of customers.
“We have a terrific $1billion portfolio of assets and extensive development opportunities for both our existing and new tenants,” Mr Tormey said. “While we have the lowest office vacancy in Australia – virtually no vacancy in industrial buildings – and many brand new developments, we are long term owners and see the benefits of making sure our offering suits our customer base in the future.”
Brisbane based De Luca Construction & Development worked with Brisbane Airport Corporation in delivering the project and commented that they are seeing increasing demand for this type of construction work. “Taking an existing building that could be 20 or 30 years old and installing modern systems and features is not without its own challenges,” said De Luca’s MD Nic De Luca. “This project required substantial attention to make sure the new fire system and office refurbishment was suitable for the needs of the main tenant GPC,” he said.
Brisbane Airport Corporation is not the only company investing in its portfolio, with Charter Hall recently completing a substantial refurbishment on its 18,000sqm distribution centre at Pinkenba which was previously occupied by NQX. Goodman has also invested heavily in its existing assets at Hendra and Acacia Ridge and Stockland has completed a substantial refurbishment of its highly exposed distribution centre on the corner of Nudgee Road and the East-West Arterial.
Anthony White is forecasting this trend to continue. “We have seen repositioning strategies rewarded with some exceptional leasing outcomes over the past 18 months,” he said. “As tenants demand more efficient buildings we will see increased activity in distribution centre refurbishments.”
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