TENANTS HOLD UPPER HAND AS STOCK RISES
Negotiating power is tipping away from landlords in the Gold Coast’s northern precincts, where a growing number of developments is keeping rents in check
A MASSIVE pipeline of stock in the Yatala industrial market will keep rents in check in the near future, with downward pressure looming as a growing pool of landlords compete for tenants.
The latest Ray White Yatala Industrial Overview, which also takes in the precincts of Ormeau, Beenleigh and Stapylton, introduces the possibility of volatility entering the market with negotiating power tipping away from landlords.
The report says there is 200,000sq m of stock in the development pipeline either under construction or approved for development or to be given the green light from council.
Projects currently under construction include the Reward Hospitality distribution facility (13,527sq m) and the Schultz manufacturing centre (7146sq m), both at Yatala.
Net face rents for the three months to March 31 increased very slightly to $127sq m or 0.63 per cent.
“As more stock enters the market, tenants have become more considered in their accommodation needs which will likely result in face rents remaining stable or, some small downward momentum in the shorter term,” the report reads.
It says small businesses underpin activity in the market, particularly in the sub-$1 million sale range.
“Small business confidence is instrumental to the future growth of the industrial market and key indicators such as employment growth and investment in housing development highlights a secure outlook for Gold Coast in the short term.”
However, a dearth of large-scale purchases has led to a collapse in the volume of sales, which hit $100 million in the first half of last year.
Halfway through the current period and sales have barely topped $4 million. Recent sales include 1 Gassman Drive ($2.45 million), 10/38 Computer Rd ($503,000) in Yatala and 26/28 Burnside Rd ($400,000) in Ormeau.
The report points to buyers struggling to obtain finance and changes to the self-managed superannuation fund regime also hitting the owner-occupier market.
There is bad news for sellers as well with industrial buyers, similar to tenants, having more stock to choose from.