Private investment in Brisbane's industrial market weakens

Private investment in Brisbane's industrial market weakens
Private investment in Brisbane's industrial market weakens

Queensland’s economic recovery remains on track, recording its fourth consecutive quarter of growth, expanding by 0.9 percent in Q4 2016, the strongest quarterly result in more than four years, according to Cushman & Wakefield's latest report.

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Private investment in Brisbane's industrial market weakens

"Growth in public investment and stronger household consumption underpinned the positive result, offsetting weakness in private investment.

Brisbane’s occupier market continues to be driven primarily by transport, logistics and construction industries.

Tenant demand continues to improve as tenants take advantage of competitive rents and attractive terms in the prime market," the report stated.

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Private investment in Brisbane's industrial market weakens

Volvo has recently committed to a long-term lease, of ~10,000 sq m in the Metroplex Westgate industrial park, for their Australian head office and service centre.

Rental values have remained mostly stable over the last six months, with North and Trade Coast at a premium to other markets in Brisbane.

Prime net face rent in these areas are generally $10-$20 more per sq m for assets <4,000 sq m.

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Private investment in Brisbane's industrial market weakens

"Infrastructure projects, such as Transurban’s Logan Enhancement Project, are likely to result in increased tenant demand in the South and West markets, potentially leading to greater upward pressure on rents than seen recently.

"Investment volume totalled $88m in Q1 2017, down from $173m in Q4 2016.

"The South led again in terms of total investment volume, underpinned largely by Deutsche Asset Management’s acquisition of 60-80 Southlink Avenue, Parkinson for approximately $37m," the report said.

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Private investment in Brisbane's industrial market weakens

"As a result of ongoing investment, prime yields in the South have compressed a further 25 bps over the past six months.

Occupier and investor demand is expected to strengthen in line with Queensland economic and industrial production growth," the report predicts.

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Private investment in Brisbane's industrial market weakens

"While we expect investor demand to remain robust, more restrictive financing terms may see potential owner-occupier refocus on leasing assets rather than acquiring them.

This should provide further support for increased leasing activity going forward," the report advised.

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Brisbane Cushman & Wakefield

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