Brisbane industrial vacancy hits 6 year low

Brisbane industrial vacancy hits 6 year low

3 May 2019

Brisbane’s industrial vacancy rate has tumbled for the fifth consecutive quarter to reach a six-year low, says The Courier Mail.

Knight Frank’s latest Brisbane Industrial Vacancy update found vacant space in Brisbane’s industrial property market had reduced by 7 per cent over the past quarter and by 18 per cent—or 89,154 square metres—over the past year.

Prime space in greater Brisbane fell by 8 per cent to 189,365 square metres, down 29 per cent over the year, while secondary vacancy also fell six per cent in the quarter.

The amount of available industrial space in Brisbane is now at its lowest level since 2013.

The plummeting vacancy rate is being driven by a solid take up of space over five consecutive quarters, Knight Frank Partner and Joint Head of Industrial Queensland, Mark Clifford, said

“Take up improved during the first quarter of this year, totalling 72,955 square metres across 14 transactions, with another two tenancies also leased prior to becoming vacant,” he said.

“We expect to see more activity from larger tenants with requirements of 10,000 square metres and above towards the back end of this calendar year.

Industrial land values have jumped an average of 6 per cent over the past year, as demand increases for “mega-lots” to be held for future warehouse and distribution development, The Brisbane Times reports.

The largest industrial uses are primarily for distribution, such as Coles’ planned 66,000-square-metre distribution facility at Redbank.

Most industries are reportedly searching for large blank lots within reach of road and freight networks that can be automated.

“Industrial vacancy is remaining low due to growth in logistics and warehousing activities,” Queensland Property Council Executive Director, Chris Mountford, said.

“With land supply relatively constrained within Brisbane, the opportunity to redevelop in existing industrial areas will become more attractive as tenants look to amalgamate into new facilities,” he added.

A recent industrial strategy released by Brisbane City Council has marked the increased demand for industrial land as a challenge for the city.

Demand for Brisbane’s industrial land would potentially outstrip supply by 2041, Council city planning chairman, Matthew Bourke, said last month.

“Council’s Brisbane Industrial Strategy 2019 has put forward nine actions to ensure Brisbane is well placed to support job and economic growth in the future while also protecting our environment and way of life,” he added.

A measure of relief may come when new industrial lots come online later this year.

“Speculative development starts are expected to be higher this year with major investors using speculative developments to grow their funds under management. With much of the available speculative space absorbed late last year, this will trigger a new round of construction,” Knight Frank Partner Research and Consulting Queensland, Jenelle Wilson, said.

Ms Wilson said there were currently 15 industrial tenancies of 10,000 square metres-plus available, with eight prime and seven secondary spaces, a level which has remained stable over the past quarter.