The south east Queensland industrial market has had a positive few years as land supply dwindles and occupier demand grows. Join us to talk about all things industrial across the region, from new development, occupier trends, leasing, sales, yields and what the outlook for the sector for 2024 is.
Ray White Head of Research Vanessa Rader was joined by RWC Northern Corridor Group Director Chris Massie and RWC Queensland Director - Industrial Sales Paul Anderson. The group discussed new development, occupier trends, leasing, sales, yields, and the outlook for the sector in 2024.
Vanessa said industrial had been the asset class of choice, and asked Paul and Chris why they thought the sector had been doing so well. “I think the start of the current run was covid - e-commerce pumped, vacancies went down, and rents went up,” Paul said.
“A lot of capital came into the sector, and if you overlay that with the Queensland story which is one of growth and prosperity, it’s become one of the tightest markets I’ve seen in the last 25 years.”
Chris was also optimistic about the performance of the industrial market.
‘Well who doesn’t love a shed?” Chris said.
“This asset class has stood the test of time for the last 20-odd years and has been the cornerstone of this part of the world.”
Vanessa said land availability for industrial development was very low across both south east Queensland and the country.
“Since 2008 when I started in real estate, the land price stayed the same for about 12 years,” Chris said.
“Leading into covid, in the three years prior, we started to see that up lift of about 10-15 per cent.
“Now we’ve seen that bursting at the seams post covid as well with increases of 20-30 per cent in both land values, and sales and leasing.”
Paul said there was little land available across the Brisbane markets.
“Finding land in the Trade Coast market is like finding a unicorn, so often people are buying an old shed, knocking it over and building a new one.
“In Eagle Farm the ones I’ve tracked over the years net back to about $1000/sqm, but that’s not there at the moment because there’s no product, so the next stop is kind of Northgate/Geebung.
“Northgate/Geebung was at about $600/sqm in 2020, and I think today it would be about $850-$900/sqm, but again there’s nothing really available in Geebung.”
Chris said there was a little bit of industrial land available in the Brendale area, with a bit more coming.
“But you’re still looking at $700/sqm to get anything sub-one hectare, and that’s if you can find it,” he said.
“There is some land coming north of Brisbane, but it’s probably 3-5 years away before we see any general industry land.
“The Caboolture land we recently sold at Corporate Park East, we sold 40 lots in a day and a half. When the developer asked if we could get him some pre-sales, I rang him the next day and said it was all done.
“It was about 50/50 between owner occupiers and developers.”
Chris said many small businesses wanted to get out of the rent cycle and build their own premises.
“It just comes down to whether they can find that unicorn, and if they find the land they’re prepared to pay the tax of today’s market to own their own,” he said.
“It’s almost impossible to find something that fits their bill existing, so they pretty much have to find that land and build it.”
Vanessa said existing industrial assets were king in NSW due to the high construction costs, and she asked if Queensland was seeing the same trend.
“Given the current conditions people aren’t hesitating because they think the sky’s going to fall in, it’s more a hesitation around getting in and controlling costs,” Paul said.
“So if you can get in and do that with an existing building it’s a good idea.”
Chris said smart investors were looking to purchase existing buildings because you can’t replace it for what you’re buying it for.
“We’re still seeing rents increase for that reason - if you build a new 1,300sqm box and you’re chasing $160-180 a metre for it, the existing tenants out in the market are paying $140-150, so there’s that 10-20 per cent gap between new and old.”
