warehouse
Demand for warehouses soared during 2021. Image supplied.
  • Brisbane recorded 4.3% growth in the year to March 2022
  • This is lower than Sydney (9.6%) and Melbourne (10.9%)
  • Pre-commitments across Brisbane average $115 per sqm,, with this figure expected to increase to $130 in three years

A period of robust rental growth across the industrial and logistics Brisbane markets is expected into the second half of 2022 and 2023, at a rate that should bear resemblance to the Sydney and Melbourne markets, suggests Colliers.

A 4.3% rise in prime industrial rents was recorded in the year to March 2022, lagging well behind both Sydney (9.6%) and Melbourne (10.9%).

This growth has been increased by speculative supply and competitiveness from developers across the pre-commitment market.

During the first quarter of 2022, vacancy rates across Brisbane were just 3.1%, which is fuelling favourable conditions leading into the second half of 2022. The ATC and North submarkets have even lower vacancy rates, at 1.3% and 1.7% respectively.

Although there is the potential for a modest increase over the next six months as speculative projects enter the market, tenant briefs and the lack of existing space will ensure strong take-up,

“Looking ahead, we are forecasting rental growth in the order of 6 per cent over the next 12 months for the Brisbane market, with selected precincts such as the ATC and North expected to outperform given the lack of leasing options,” Industrial Director of Research Luke Crawford said.

“New rental benchmarks will be set over the next 12 months, particularly for pre-commitments given the sharp rise in construction costs as developers look to offset this through higher rents.”

Luke Crawford, Colliers

“The availability of fully serviced industrial land in the Brisbane to Gold Coast corridor is at an all-time low, meaning there is very little future supply in the pipeline and the strongest demand for industrial product witnessed in a generation,” added Nick Evans, Director Industrial at Colliers.

Solid start

The occupier market in Brisbane has had a strong six months, following a record 2021 where almost 700,000 sqm of industrial and logistics space was leased, thanks to e-commerce and inventory levels rising across the board due to global supply chain disruptions.

Currently, pre-commitments across Brisbane average $115 per sqm, with this figure expected to increase to $130 by mid-2023.

It is not uncommon to see warehouse rents above $160 per sqm in key Western Sydney markets. As a result of this, prospective occupiers are appealing are seeking to take advantage of this rental disparity.

“Given the current low interest rate environment, we expect strong demand from owner occupiers and speculative developers,” David Brisk, Director Industrial at Colliers said.

“Vacancy across the market in Southeast Queensland is at an all-time low so we look forward to delivering a strong outcome on behalf of our clients.  

“Brisbane is on the cusp of a period of strong economic expansion and the local industrial and logistics market will be front and centre of this,” Mr Crawford said.

“While the yield compression cycle has slowed, the pick-up in rents will reinforce investment decisions and drive further capital inflows into the Brisbane market.”

You May Also Like

Australian auction market June 2022 update

Brisbane and the Gold Coast remain strong, while results are lower in the southern cities

How long will the housing market crash last?

Australian downturns in property are have typically been 18 months or less, according to BuyersBuyers’ Pete Wargent

Canberra Property Market Predictions 2022 – House Price & Rental Forecast

Prices have been trending higher in the nation’s capital, but will this continue?

Rental market stabilises as vacancy rates flat line

With the national vacancy rate remaining at 1% and many other city vacancy rates not dipping, could it be a stablising market?