Latest industrial estates to hit the Brisbane market coming up big: HTW

Latest industrial estates to hit the Brisbane market coming up big: HTW
Latest industrial estates to hit the Brisbane market coming up big: HTW

Brisbane’s industrial space has seen a few new estates come online recently.

They all have two things in common: good access to major transportation infrastructure and surrounding amenities, according to the latest report from Herron Todd White (HTW).

This is the case in particular for North Lakes Business Park (further stage released in 2017 and now almost sold out), Metroplex at Westgate South in Richlands (one lot remaining) and Colmslie Business Park on Lytton Road in Morningside (recently released).

North Lakes Business Park is a mixed-use development precinct that accommodates a variety of uses including retail, office, warehousing and service industry.

An example if a a new office/warehouse warehouse (pictured above) that sold for $3.1 million just weeks after completion last year.

The valuers stated that "this prime location has attracted a wide variety of occupiers due to its exposure and road connectivity to the Bruce Highway, Gateway Motorway and Gympie Road".

"Stage 1 was completely sold out after being released in 2017 and Stage 2 is expected to come online around the third quarter of 2018."

The Metroplex at Westgate has offered an alternative to Brisbane’s existing high profile commercial centres within the CBD, Airport precinct and Port of Brisbane.

The Metroplex South estate is located in Wacol within Brisbane’s "Western growth corridor" and sits at the nexus of the Ipswich Motorway, Logan Motorway and Centenary Highway.

Metroplex Westgate is serviced by both rail and bus transport options.

Transportation infrastructure around Metroplex Westgate has been significantly upgraded, making it a prime industrial location the report noted.

The valuers stated that Colmslie Business Park’s prime location within the TradeCoast is a major asset to the development, having direct access to the Brisbane Airport, Port of Brisbane and major transport routes with the added benefit of being close to the CBD, major infrastructure and public transport.

The TradeCoast precinct is the most tightly held industrial precinct in Brisbane.

"We expect to see high levels of pre-commitments throughout 2018, as was seen in 2017 with a 19% increase in space from 2016 supply levels."

"This is due to the desire of tenants to occupy new, modern space with attractive rents and good incentives," noted the valuers at HTW.

On the other hand, there has been limited levels of speculative development.

Development activity for owner-occupiers has been "subdued" with Sigma Pharmaceuticals being the only major build in 2017 of approximately 14,990 square metres.

Hilton Foods meat processing facility at Logos Heathwood Logistics Estate will comprise circa 45,000 square metres as well as a Coca-Cola Amatil expansion being completed in the first half of 2018.

Several transport-related infrastructure projects are well underway in Brisbane that will stimulate industrial development through better connectivity and transport options.

The Kingsford Smith Drive update commenced mid-2016 at a cost of $650 million and involves widening Kingsford Smith Drive from four to six lanes in certain areas, road improvement works, public transport improvements and cycling and pedestrian infrastructure and is projected to be completed in 2019.

Brisbane Airport Corporation (BAC) has invested $1.7 billion in infrastructure projects since 2012 with a further $1.7 billion investment in redeveloping the domestic terminal, building a new runway, building a new multi-storey car park, investing in the latest passenger friendly technology and developing a new Industrial Park and Auto Mall project.

The Gateway Upgrade North Project (Nudgee to Bracken Ridge) is a $1.143 billion project aimed to reduce congestion (particularly from population growth and continued expansion of the TradeCoast), improve safety and increase the efficiency of the motorway network.

The Logan Enhancement Project is a $512 million project to improve congestion along the Logan Motorway/Mt Lindesay Highway/Beaudesert Road interchange and the Wembley Road/Logan Motorway interchanges.

It also includes construction of southfacing on and off-ramps on the Gateway Extension Motorway at Compton Road

The Inland Rail is another major project that will see the construction of a 1,700-kilometre freight rail that will run from Tottenham in Victoria to Acacia Ridge in Queensland.

This will be up to ten hours faster than the existing rail network via Sydney and will assist in reducing congestion on highways the report noted.

The valuers stated that overall, industrial yields stabilised over the first quarter of 2018.

Prime yields are currently sitting between 6.25% and 7.25% with the TradeCoast precinct having the tightest investment yields, whilst secondary stock typically ranges between 8% and 12%.

The latest report noted rent levels have been low some time now but have remained stable over the past year.

Developers offering competitive rents and incentives in the pre-commitment market are factors holding back rental growth.

Leasing demand increased over the first quarter of 2018 and was mostly concentrated in the south side.

Net face rents for prime industrial assets generally range between $95 and $140 per square metre per annum whilst secondary rents range between $50 and $100 per square metre per annum.

Incentives being offered to secure tenants typically range between 5% and 20% for prime assets depending on size and between 8% and 25% for secondary assets.

The majority of leasing transactions during 2017 were design and construct and pre-commitments, with a high volume of this also expected for 2018.

Tags: 
Brisbane Commercial Market

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