Brisbane’s industrial market on the improve with jump in rental growth: Savills

Leasing activity in Brisbane’s industrial market is on the improve, seeing rental growth for prime grade industrial stock and a growing pre-lease focus from tenants, according to Savills’ Spotlight on Brisbane Industrial report.

Savills Queensland associate director research Helen Swanson said that the market is competitive with new builds often more so in terms of rental rate than existing property.

“Leasing activity is particularly strong for prime grade quality warehousing, especially free-standing product,” said Swanson.

She noted that a 2.5% growth in rent has been seen for prime grade product over the 12 months to March 2014, as well as a number of significant pre-commitments. This includes 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,” she said.

In the Brisbane industrial leasing market, it’s transport and logistics taking out gold as the most active – representing a huge 25% of all leasing activity over the 12 months to March 2014.

The wholesale and retail sector were responsible for 19% of all leases.

Similarly the residential market surge in south-east Queensland, which many have said is investor driven, has increased building supply demand. Despite this, the tenant market is said to still perceive that supply outweighs demand, explained Swanson.

“These 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,” she said.