March 2016 – Brisbane 5,000sqm+ Industrial Leasing Market

11 March, 2016 / Vanessa Rader and Dan Costello

The Brisbane Industrial leasing market has gone through a period of uncertainty over the last two years, particularly in the over 5,000sqm size range. Tenant demand has not increased significantly, however the attraction of prime and purpose built facilities remains high, particularly by the Logistic and Transport groups.

While little speculative supply has been added to the market, the move from existing to new has resulted in an increased vacancy particularly in the secondary asset class.

This has resulted in some compression in net face rents across all quality grades, while many larger owners have become more aggressive offering incentives and discounted face rents to secure longer lease terms.

Despite supply projects being strongly demand led keeping a lid on the current high vacancy situation, there has been some decline in face rents. The small declines have been uniform across all regions, however the South East representing the least reduction, now achieving an average net rent of $99/sqm. The South West, North and South have reduced by 6.2%, 6.3% and 6.3% respectively with an average rent in the range between $100/sqm and $102/sqm. The Trade Coast continues to achieve the highest rent across the Brisbane metropolitan area due to access and quality of stock, this market has attracted a lesser reduction in rents falling by 5.1% over the last two years to currently average $107/sqm. The projection for rents are to now stabilise and maintain their current rate, there is little expectation for these rents to rebound back to prior highs in the short term until stock available to the market is absorbed. Concerning however is the growing spread between prime and secondary rents as greater vacancies emerge in the secondary market, discounting is already evidenced in the market and is likely to continue until more stock is taken up.