Tenant demand, lack of supply tipped to bolster industrial market

LIMITED supply and growing occupier demand will continue to drive Brisbane’s strengthening industrial market in 2018, as investors eye opportunities in key metropolitan precincts.

According to CBRE research 2017 was a robust year for Brisbane’s industrial investment market, with a total sales turnover of $1.2 billion, up 63 per cent on 2016 figures.

CBRE’s Queensland industrial director Edward Bull said the 2018 industrial market outlook was optimistic, with improved leasing conditions to subsequently encourage sales.

“We’re optimistic about rental growth in Brisbane, which will further enhance the demand for investment-grade product. Prime assets offered to market in 2018 will be keenly contested among buyer groups, especially if provides scale of over $50 million,” Mr Bull said.

“Our team is confident if a super prime asset were to be offered for sale, we would see a record yield achieved, based on the level of capital looking at Brisbane and the off-market offers we have already fielded early in Q1.”

Mr Bull noted that the surging e-commerce sector will place increased pressure on inner industrial land values, as the need for distribution centres near major arterials and customers grows.

“Over 2017, tenant demand from businesses involved with logistics, warehousing and storage services accounted for 30 per cent of leasing activity,” he said.

“Land values in key metropolitan Brisbane precincts are up $50/sq m, on average, largely due to the lack of supply of good quality, well positioned englobo land parcels coupled with increased demand for inner industrial sites.

“The increasing trend towards automation is also set to be a game changer this year within logistics, manufacturing and warehouse sectors and there will be heavy competition for state-of-the-art, super prime grade facilities.”