AFTER a tough year, cautious optimism is building in the Brisbane industrial market.
Ray White Commercial director of industrial transactions Graham Norris believes the Brisbane market was “in a very slow stage of cautious recovery”.
“Over the last 18 months the market place diminished to a certain extent and that was because of the unwillingness of banks to lend money for investment in property,” he said.
“That market has changed around now and the banks are coming back into the marketplace willing to lend money and investors are coming back, and that includes offshore investors.”
Mr Norris said in the next 12 months there were requirements for more than 400,000sq m of space from some of the biggest names in the industrial sector.
“They’re coming because the price of land has come back to a certain extent which has made it viable for these companies to set up operations in Queensland now,” he said.
“The competitive nature of our market is very attractive to these people. And also the commitment by the State Government for an on-going $1 billion infrastructure spend is positive, which will make land more accessible and viable to industrial market.”
Jones Lang LaSalle’s latest Brisbane Industrial Market Commentary found the take-up for the first quarter of this year was 78,800sq m, bringing total gross take-up for the past 12 months to 265,200sq m, 45 per cent less than the previous year.
But there was 57,100sq m of new space completed in the March quarter and the supply pipeline was slowly picking up with 171,100sq m of space currently under construction.
According to Knight Frank’s Brisbane Industrial Market View, the market has shown a return to rental growth with prime rents growing by 3.5 per cent to average $112/sq m net across the region.
This represents the first measurable rental growth within the market in almost three years.
Knight Franks director of research (Qld) Jennelle Wilson said the net rental growth was a reflection of the lack of available stock rather than an increase in demand.
“Instead we are seeing landlords with an upcoming vacancy, realising how little competition there is currently against their building, re-setting their asking rent and expectations higher,” Ms Wilson said.
“The level of stock, particularly larger prime accommodation has continued to diminish.
“This has transferred some demand to owner-occupier purchases of land to construct their own facilities, and there are also a number of larger tenant pre-commitments under negotiation at this time.”
According to Knight Frank, the levels of vacancy as measured in April recorded another new low of 177,443sq m.
Ms Wilson said land values have now bottomed, with increased activity noted at the current price levels both from owner occupiers and also some activity re-emerging from developers.
She said the impact of mining-related tenants was now being felt in the market, previously dominated by small to medium fabrication or parts/servicing businesses covering 2000sq m to 4000sq m.
“There has recently been an influx of larger tenants such as Clough (11,277sq m), Ausco Modular (4412sq m plus 6.5ha of hardstand), Caterpillar (18,375sq m) and Australian Portable Buildings (6600sq m) which are all growing their presence in the Queensland market in response to resource projects,” Ms Wilson said.
“In addition ATCO’s purchase of 10ha, Hastings Deering (18ha) and North Qld Heavy Haulage (4ha) were all for the construction of new facilities where the current stock did not meet these tenants requirements.”
Article from couriermail,com.au written by Chris Herde and originally published on June 15, 2012