Spike in Brisbane industrial prime rents

Positive signs are emerging for Brisbane's industrial property market, with prime rents kicking 2.5% in the 12 months to March, a new report has revealed.

The spike in rents was just one of the upbeat themes outlined in Savills latest Spotlight on Brisbane industrial research report, which also showed growing tenant demand for pre-leased quality industrial space across Brisbane.

A lot of this increased focus on the pre-lease market, said the report, could be attributed to the competitive nature of this market, "where new builds can be more competitive with the rental rate than existing properties".

“Leasing activity is particularly strong for prime grade quality warehousing, especially free-standing product,” noted Savills Queensland associate director of research, Helen Swanson.

“This has led to 2.5% rental growth for prime grade product over the 12 months to March 2014."

Boding well for the market has also been the number of significant pre-commitments from major companies in the last quarter. Among them DB Schenker and Northline at Redbank and Kagan Logistics at Hemmant.

"There is also anecdotal evidence suggesting a number of other major pre-commitments may also be in the pipeline for the Brisbane market,” said the report.

The transport and logistics sectors were identified as the most active in the Brisbane industrial leasing market, accounting for 25% of all leasing activity in the 12 months to March. The wholesale and retail sectors were the next biggest movers, accounting for 19% of all leases.

"The resurgence of the residential market within south-east Queensland has also see a huge increase in demand from the building supplies industry with many of these companies taking advantage of the lower rental rates offered by secondary product", it said.

"There is still however a lack of urgency in the tenant market with the perception that supply outweighs demand."

Those two sectors are forecast to achieve strong growth over the next five years and should continue to be major takers of space in the Brisbane industrial market.

"These users are looking for efficiency gains and the option of brand new mega-style warehousing is appealing to some of the larger players,” added Ms Swanson.