'Land in demand' for QLD industrial sector

The Savills Blog

“Land in Demand” for Industrial Sector

Brisbane’s industrial property market over 2017 has remained relatively static, as indicated by limited vacancy and improved sales across metropolitan regional pockets.

Savills Industrial team in Queensland has delivered a series of successful transactions throughout the past 12 months, which has indicated a continuing strength for the distribution sector across the Brisbane’s industrial market, challenged by the lack of quality stock which is driving demand for land.

The tenant market is expected to improve early next year as the mining industry continues to pick up momentum.

There is a slight ‘flight to quality’ mindset with tenants with huge competition to secure preleases. Owners of secondary buildings will need to consider how to compete and maintain their tenants or look to repurpose these buildings.

The lack of good quality available buildings and the demand for tenants in turn are pushing up industrial land prices with small lots now at a higher rate than before the GFC.

Larger land purchases are dominated by the institutional market as they search for investment stock by developing and holding. An example of this is LOGOS and Partners Groups’ recent acquisition of 22.16ha at Captain Cook Drive, Arundel QLD.

The site will be developed during 2018 into a modern logistics estate with the capacity to accommodate up to 100,000sq m of gross lettable area (GLA).

2017 has been a year which represents that competition still remains active amongst investors however urges that the tightening of industrial yields will be limited.

A shortage of high quality investment stock within South East Queensland is probable hindering yield compression.

There is a differential as to where privates and institutional mind sets are in regards to yields – privates appear to be softer on yields.

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