November 2016 – Brisbane 5000sqm+ Industrial Leasing Market

8 November, 2016 / Vanessa Rader and Graham Norris

The Brisbane Industrial market has had some mixed results during 2016. Supply levels have been stable and not always demand led which has increased concern to the vacancy position of the market.

Despite some success with speculative supply and pre committed assets being absorbed this has been at a cost to face rents and also incentive levels.

Furthermore, this move to purpose built, D & C assets have had an impact on the secondary market resulting in significant increases in letting up periods and dampened rental rates.

During 2016 the majority of over 5,000sqm leasing transactions has been south of the river with the Logan Motorway continuing to grow as a competitive industrial hub providing new accommodation. This year has resulted in an increase in speculative development which has not aided the poor vacancy situation across the broader Brisbane market. Some of this stock however has been absorbed with tenants such as Green Foods and MJ Logistics committing to these developments however at the detriment to average net face rents and incentive levels. We have witnessed a reduction in rents over the past three years and more recently some stability with net face rents recorded at $106/sqm for the Australian Trade Coast, $101/sqm in the South precinct and $100/sqm in the Logan Motorway precinct. With growing competition, owners have had to be more aggressive in incentive levels as well as these face rents now growing to average between 15%–20% which is up 5% on early 2016 results. Unfortunately for the secondary market, demand has waned as attractive leasing terms have seen a flight to quality, putting further pressure on this markets vacancy position and average net face rents.

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