Brisbane industrial leasing market activity

By Matthew Frazer-Ryan

National Director, Industrial 

The industrial market in Brisbane has experienced significant leasing activity in the first half of this year, particularly within the TradeCoast region with Colliers International research showing over 100,000sqm of leasing transactions (for warehouses 5,000sqm and above for YTD 2017) occurring.

Colliers International research shows prime grade net face rents in the Australia TradeCoast precinct increasing 3.11% over the YoY to June 2017.  Driving growth for industrial product in the Australia TradeCoast precinct is the significant investment in infrastructure projects underway including the duplication of the runway at Brisbane Airport and the upgrading of Kingsford Smith Drive which will help improve the productivity of the region.

Limited stock of quality warehousing facilities has meant that on the leasing front we are experiencing a flight to quality with occupiers moving from older and less efficient facilities into modern A Grade facilities, as well as taking up space in the brand new spec developments providing easy access to major road networks and associated infrastructure. Considering existing A Grade facilities are tightly held in this precinct, the demand for design and construct product will increase, ensuring those developers that have landbanks leverage this benefit in the foreseeable future. Demand and take-up in the South and Logan Motorway corridor has been more subdued YTD, however ongoing negotiations for a series of new commitments are forecast to be completed in the coming quarter, and rebalance the take up across the southern market.

Colliers International research shows Brisbane industrial land values for 2.5 ha serviced land lots increasing on average 16% over the last financial year from $253/sqm in 2015/16 to $294/sqm in 2016/17.  Additionally, in the prime South West corridor, we are seeing a tightening of large lot land supply, particularly for sites larger than 5ha and those with immediate access to the Logan, Ipswich and Gateway / M1 Motorways. We are now heading into single digit opportunities of available large lot land sites to develop. This is leading to the increase in land values and driving occupier requirements further south to Yatala or further west to Ipswich, which is helping grow and develop these districts.

Occupiers and developers in these precincts are now planning up to 10 years ahead and looking for sites to build on that are situated adjacent to existing transport nodes or future road network upgrades. They are land banking to secure their future industrial footprint. Some of these occupiers that have less flexibility in choosing a location are also now starting to look at brownfield sites that provide short to medium term income, and that can become available for future redevelopment in lieu of the traditional land bank strategy. 

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