The Brisbane industrial market is expected to continue its favourable momentum late in 2017 into 2018. Occupancy levels continue to improve albeit slowly; this will eventually translate into some positive movement for the leasing market in the next 12–18 months.
The highlight from 2017 has been the aggressive investor demand for tenanted stock, with a range of buyers competing for investment grade stock which has had a substantial effect on yield rates falling averages to sub 7.00% across the prime market. Also encouraging has been the sale of vacant industrial assets which highlights the new breed of investor who is willing to move up the risk curve. New supply in the most part remains demand driven which will aid in keeping vacancy moving downward and keeping market fundamentals positive.
There are currently 41 large (over 5,000sqm), active industrial projects in the development pipeline across the Brisbane metropolitan area. These account for 601,800sqm and have anticipated completion dates over the next two years, however it is unlikely that the 9 projects (122,191sqm) still in early stages (including DA Applied) will be completed over this timeframe. Furthermore the 26 projects in DA approval stage (416,820sqm) may not join the market; historically these projects have been strongly demand led with limited speculative development, as such these projects are more likely to remain on hold until suitable commitments are sourced. The development pipeline is well split across the South, ATC and Logan Motorway region highlighting these as the prime industrial nodes of Brisbane given their access to transport hubs, with fewer larger North properties proposed. Currently there are 6 projects under construction which total 62,986sqm including home for HMG Hardchrome at Brisbane airport (ATC) of over 13,000sqm and the Volvo Bus and Truck Headquarters in Wacol (Logan Motorway) which is close to 10,000sqm in size.