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Brisbane industrial market growing

Brisbane industrial market

Colliers says Brisbane’s industrial and logistics market is set to grow in the second half of 2022 and into 2023, helping it be on par with Sydney and Melbourne markets.

The investment and property management company notes prime industrial rents in Brisbane increased by 4.3 per cent in the year to March 2022.

It says it lagged both Sydney (9.6 per cent) and Melbourne (10.9 per cent) respectively with this partially due to an increase in speculative supply and competitiveness from developers within the pre-commitment market.

“Looking ahead, we are forecasting rental growth in the order of six per cent over the next 12 months for the Brisbane market, with selected precincts such as the ATC and North expected to outperform given the lack of leasing options,” Luke Crawford, Colliers’ Industrial Director of Research, says.

“New rental benchmarks will be set over the next 12 months, particularly for pre-commitments given the sharp rise in construction costs as developers look to offset this through higher rents,” he adds.

According to Colliers, low vacancy rates across Brisbane of just 3.1 per cent in Q1 of 2022 have created favourable conditions leading into the latter part of 2022, with the ATC and North submarkets being lower at 1.3 per cent and 1.7 per cent, respectively.

It says while there is the potential for a modest increase in vacnacy rates over the next six months of speculative projects as they enter the market, current tenant briefs and a lack of existing space for lease within the market will ensure the strong take-up of these facilities.

“The availability of fully serviced industrial land in the Brisbane to Gold Coast corridor is at an all-time low, meaning there is very little future supply in the pipeline and the strongest demand for industrial product witnessed in a generation,” Nick Evans, Director Industrial at Colliers, says.

Brisbane’s industrial and logisitics market is set for a period of strong rental growth, Colliers adds.

“Given the current low interest rate environment, we expect strong demand from owner occupiers and speculative developers,” David Brisk, Director Industrial at Colliers, says.

“Vacancy across the market in Southeast Queensland is at an all-time low so we look forward to delivering a strong outcome on behalf of our clients,” he adds.

Colliers says Brisbane’s occupier market is off to solid start in 2022, after a record year in 2021 that saw almost 700,000 sqm leased, underpinned by the continued growth of e-commerce, and a rise in inventory levels given supply chain disruptions.

“Brisbane is on the cusp of a period of strong economic expansion and the local industrial and logistics market will be front and centre of this,” Luke says.

“While the yield compression cycle has slowed, the pick-up in rents will reinforce investment decisions and drive further capital inflows into the Brisbane market,” he adds.

At present, pre-commitment rents across Brisbane average $115 per sqm; however, it is expected that these will average closer to $130 per sqm by mid-2023, Colliers explains.

It adds that by comparison it is now common to see warehouse rents above $160 per sqm in key Western Sydney markets and as a result, the rental disparity between Sydney and Brisbane is appealing to prospective occupiers looking for space.

For more information on Colliers, click here.

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