140,000 sqm of speculative stock in the industrial and logistics market is set to hit the market this year – double the five-year average.
A new CBRE research report shows developer confidence in Brisbane is being underpinned by strong investor demand, with ongoing competition for available stock and a record $1.5 billion in industrial and logistics assets changing hands last year.
Leasing activity is on the rise, with 260,000 sqm of active leasing briefs for Brisbane industrial and logistics space.
Tom Broderick, CBRE Research Associate Director, says the sector has emerged as a clear winner from Queensland’s market uncertainty caused by the pandemic.
“E-commerce penetration has accelerated over the past 18 and is one of the key drivers of demand for floorspace,” Tom says. “Investors have responded by seeking to increase their exposure to the sector however there has been a lack of investment stock coming to market to fulfil this demand. As a result, many developers and institutional owners have decided to create new stock by building speculatively.”
Peter Turnbull, CBRE’s Queensland State Director, Industrial & Logistics, says around 75 per cent of the speculative stock developed in Brisbane since 2013 had a lease commence within one year of practical completion.
“Developers are backing themselves based on historic trends to lease this new supply, particularly in light of the high number of leasing briefs currently in the market,” Peter says.
The report shows Brisbane industrial land values have risen by approximately 3.5 per cent every year over the past five years, driven by tight land supply.
“Developers and investors are desperately trying to increase their land holdings in the Brisbane industrial market,” Peter adds. “However, there is a lack of available land to purchase, with large institutional owners generally land banking – putting upward pressure on pricing.”
Food manufacturing is another focus area on the rise in the findings, particularly given the Australian Government’s $1.3 billion Modern Manufacturing Strategy, issued in late 2020, under which food & beverage manufacturing was identified as a national priority.