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Queensland revealed as highest growth state for warehousing and logistics

Queensland’s online retail demand will continue to drive requirements across the market in 2020, where ecommerce logistics, distribution and warehousing has shown a growth of 5.2 per cent annually, which was the highest of any state nationally.

According to Savills Australia, major project and infrastructure completions in Queensland have helped stimulate economic progression, industrial investment demand, and leasing take up.

Queensland’s online retail demand will continue to drive requirements across the market, where ecommerce logistics, distribution and warehousing has shown a growth of 5.2% annually, which was the highest of any state nationally.

Callum Stenson, State Director of Industrial & Logistics at Savills Australia, noted that a positive spill-over effect into Brisbane’s industrial markets was imminent.

“Investors are searching the market for quality investments and after a strong flurry at the start of the year, which saw some major transactions in Brisbane, the paucity of stock has stifled these major transactions,” Mr Stenson said.

Savills has recorded three major industrial sales transacting at over $100 million in 2019 across the Brisbane market: 111-137 Magnesium Drive at Crestmead for $182.50 million, 99 Sandstone Place, Parkinson for $134.2 million and 81 Schneider Road in Eagle Farm at $102.5 million.

“However, there currently remains a lack of quality industrial investment offerings in the $10 million plus range being brought to the market,” Mr Stenson said.

The leasing market remains strong, with high levels of leasing activity being experienced across all sizes. This has dropped the Brisbane vacancy rate to 4.05%, the lowest vacancy over the past 5 years.

Queensland’s online retail demand will continue to drive requirements across the market, where ecommerce logistics, distribution and warehousing has shown a growth of 5.2% annually, which was the highest of any state nationally.

Savills Research forecast this growth to generate an additional 350,000sq m of industrial space every year.

Mr Stenson said that tenants are still seeking the flight to quality option as well as consolidation which are fueling demand for new construction, which in turn should lead to rental growth.

“This can be seen in the pre-lease market, particularly in the South along the Logan Motorway corridor where Huhtamaki, Phoenix, CEVA and DHL have taken up 60,000sq m over the last 12 months,” he said.

Trends are suggesting that developers plan to capitalise on strong tenant demand by constructing speculative build to market warehousing solutions.

A recent example of this has been Dexus’ approval to build a 50,000sq m warehouse on Freeman Road at Richlands. A successful example of such confidence is in Willawong, where Stockland has fully leased their speculative 18,456sq m building in under four months.

Industrial land in the immediate Brisbane precinct has seen almost complete exhaustion of industrial land supply over the last 12 months.

“Larger lots have become extremely scarce as we have seen considerable take up to service some of the recent ‘supersize’ requirements coming to market,” Mr Stenson said.

Investors have now moved to Brisbane’s outskirts, as seen with Mapletree, who have purchased 36ha of industrial land in Crestmead for a reported $95 million.

“Based on the current land take-up rate, we expect the demand for industrial land will overtake supply by 2035,” Mr Stenson said.

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