Brisbane industrial land values heading north
Land values across all Brisbane industrial precincts have trended upwards for the past three years, with the average land value increasing 5.3% to $310 per sqm, for the YoY to March 2019.
As per the latest Colliers International Industrial Research and Forecast Report, Australia Tradecoast (ATC) experienced the strongest growth in land values for the YoY to March 2019, increasing by 9.9% to an average price of $390 per sqm, from $355 per sqm in March 2018.
“We anticipate that the limited new development supply will continue putting upward pressure on rents in ATC over the next few years,” said Matthew Frazer-Ryan, National Director, Industrial at Colliers International.
“As at March 2019, average prime grade net face rents are $118 per sqm, the highest out of any other precinct.
“Average incentives fell by 1.5% to 12.5% for the YoY to March 2019, which usually is a sign of future rental growth for prime grade assets.”
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Karina Salas, Research Manager at Colliers International said they anticipate Brisbane’s industrial land values will continue to rise over the medium term.
“This is due to the current and forecast value proposition of the investment achieving solid yield spreads compared to Sydney and Melbourne, of up to 170bp in some instances, and the significant infrastructure investment program under construction in South East Queensland.
“According to the Brisbane City Council Industrial Strategy 2019, industrial land in the outer Brisbane regions remain under pressure from encroaching residential and other non-industrial uses and has been reduced by 10 per cent in the last five years (2 million sqm of industrial gross floor area).
“The rezoning of industrial areas is becoming an issue worldwide as population growth continues putting pressure on land availability to meet housing demand and encroaching into industrial-use land.
“Demand in the Brisbane industrial market continues to transition from traditional manufacturing industrial use to transport and logistics, retail warehousing and mixed industry business precincts. Ecommerce and online retail activity is changing the way the industrial market operates in Australia and Brisbane is not isolated to this trend,” said Mrs Salas.