Queensland Commercial & Industrial Property Market Review - November 2021
The Brisbane industrial market is currently seeing considerable increases in activity and high demand across the board from tenants, owner occupiers and investors alike.
Areas with the most significant traction in the market continue to be property investment and development for ecommerce and logistics.
Industrial properties have proven their resilience through Covid in the last two years, with investors worldwide pursuing industrial property as an investment class.
We are seeing a further compression of yields as investors compete for fewer and fewer quality assets on the market, dropping down into the 5-6% net yield range for most assets. Many investors are making the decision to capitalize on these market conditions, taking a defensive position and divesting out of assets, with a view of buying back into the market in the future when interest rates increase, yields follow and there are better opportunities in the marketplace.
Owner occupiers, who are often also competing with investors are compromising on certain factors if the site satisfies the key requirements of the business, for example purchasing sites with larger office components than necessary to get the right warehouse size. In many cases, our agents are also securing more deals at full asking price or above, when the ideal property is found for an owner occupier due to the limited stock available on the market.
The last two years has seen a significant net absorption of available space across all size ranges for tenants. More recently rental rates have begun to rise while incentives have reduced. Increasingly, our agents are now fielding multi- offer scenarios for rental properties.
Landlords are now often choosing from not only the best price, but also the best terms or the highest calibre of tenant, from multiple lease offers submitted for the same property. Whilst the pandemic has caused many issues for supply chain management and international trade, the flow on effects of the pandemic has largely been a boom for local industry.
All industries have experienced some level of growth and remain active in the market. Most notably are logistics and distribution operators off the back of a dramatic increase in online shopping. The exceptions to this are the travel, tourism, and event management industries, who are still hampered by covid- related restrictions.
“Almost all industries have experienced some level of growth and remain active in the market.”