Brisbane industrial hits investor lists following QLD's economic turnaround: Savills

Major project completions in Queensland’s mining sector have helped stimulate economic progression, with growth in state final demand for the 12-month period rebounding above long-term averages, according to Savills Australia.

The company’s latest industrial report for Brisbane reveals that ongoing mining projects in Queensland are likely to see continued positive effects on the state’s economy, which coupled with the forecasted $46 billion in infrastructure projects that are in the pipeline, will drive further demand for industrial space in Brisbane.

Associate Director for Capital Strategy & Research, Shrabastee Mallik, noted that a positive spill-over effect into Brisbane’s industrial markets was imminent and would aid ongoing leasing demand and generate an increasingly positive business sentiment for the industrial sector.

“While the e-commerce sector in Australia is still in its infancy stages, there is growing evidence that Australians’ appetite for online retailing is rapidly increasing,” she said.

“Although Amazon’s entrance into the Australian market was underwhelming, the company has been increasing its footprint across the nation, as it sees the growth potential in the online retail space.”

Callum Stenson, State Director for Industrial & Business Services in Queensland said that he had observed an increase in investor enquiries about industrial warehouses for transport and logistics in response to growing recognition of Australia’s online retail market. 

“While sales activity in the current financial year was notably less than the records set in FY-16 and FY-17, we are going to see a comeback over the remainder of 2018, particularly from domestic investors who see the diversification benefits in investing across grades and precincts,” he said.

“There was a notable drop in offshore investors purchasing industrial assets as a lack of large prime-quality offerings were available for sale.”

Mr Stenson noted that when looking at leasing activity, the 12 months to June 2018 saw tenants from the Transport & Logistics sector dominate overall leasing activity and account for more than half of the total space leased in Brisbane’s industrial market.

There is a growing demand for industrial facilities to become more integrated business facilities supporting multiple types of transportation, especially as Australia’s international trade continues to increase at a rapid rate. 

Growth projections made by HSBC Trade Connections forecasts Australia’s trade to grow nearly 130% by 2025, almost double the global rate.

Fringe areas which extend as far as the Gold Coast have also recorded notable increases and confidence.

Logistics giant Toll Group has signed a pre-commitment for a purpose built facility on the Gold Coast site formally known as home to multinational Colgate-Palmolive.

Renamed Gold Coast Logistics Hub, the 22ha Arundel site was purchased last year by the Asia Pacific logistics property specialist, LOGOS Property and Global Fund Manager Partners Group for more than $20 million.

Toll has committed to an initial 12-year lease across a 10,250sq m logistics facility, with Savills recording it as one of the largest industrial deals done on the Coast in recent times.

 
Artist Impression of Gold Coast Logistics Hub.

Mr Stenson said that the commitment enabled Toll to consolidate several existing facilities and bring their operations together in under one roof.

The masterplanned layout for the Hub provides flexible design and construct solutions from 3,000sq m to 30,000sq m. 

”The Hub will provide local occupiers with quality opportunities, representing the last scalable infill site in the central Gold Coast region,” Mr Stenson said.

Brisbane’s Southside and Trade Coast precincts recorded the largest falls in market yields in the year to June 2018.

Looking forward, Ms Mallik said that infrastructure projects were providing the impetus for developers and institutional land owners to bring speculative development back to the forefront, recognising the recent lift in leasing demand, particularly in well-located locations close to major arterial roads. 

“While both leasing and sales activity were down in the most recent financial year compared to the previous year, it is expected that 2018 will continue the trend of strengthening tenant and buyer demand, as indicated by industrial job advertisement growth in Queensland, which is now the third highest nationally,” she said. 

Savills is a leading global real estate service provider offering the full spectrum of services from strategic advice to managing assets and projects and transacting deals. Callum Stenson is Savills QLD State Director for Industrial & Business Services. Shrabastee Mallik is Savills Associate Director for Capital Strategy & Research. To learn more about Savills, visit savills.com.au.