Institutional investors dominate Brisbane’s industrial market

Institutional investors are chasing logistic and warehouse opportunities in Brisbane with the sector recording an estimate of $230 million in sales in Q1 this year (for properties above $5 million). Portfolio sales that were an equity buyout made up an estimated $106 million of this total.  

Rise of e-commerce, logistics and warehousing activity are influencing investors to increase their exposure in the industrial markets across Australia. 

“Investment into the industrial sector has started off strongly this year, with indicative figures showing an increase of 135 per cent on Q1 last year, when sales totalled $98 million, and $27 million was attributed to portfolio sales,” said Simon Beirne, Queensland Chief Executive at Colliers International.  

“Institutional investors are dominating, making up about 74 per cent of the sales, with most of the activity occurring in the greater Brisbane south and south west regions.  

“Strong investor demand and limited available assets have led to further increase in prices and tightening yields across the board, with average prime grade yields sharpening for eight consecutive years and average secondary grade yields tightening for a sixth consecutive year,” said Mr Beirne. 

The highest settled industrial sale in Queensland so far this year was a portfolio of two significant industrial assets in Acacia Ridge which were sold to a Sydney based private investor for $42.08m. 

The subject properties are 134-160 Ingram Road and 220-240 Bradman Street and span a total of 10.3ha of general industry land.

They are occupied by Austube Mills Pty Ltd and Onesteel Reinforcing Pty Ltd on long term leases. Both companies were acquired by GFG Alliance, an international group of businesses, founded and owned by the British Gupta Family. 

The offering was sold via an Expression of Interest campaign marketed by Simon Beirne and Matthew Frazer-Ryan from Colliers International and Tony Iuliano and Gary Hyland from JLL, on behalf of KordaMentha. 

As per the latest research from the Industrial Research and Forecast Report, prime grade yields have tightened in the range of 25bp to 50bp for the past 12 months, to an average of 6.07 per cent as at March 2019.

Lower yields have driven an annual average increase in capital values of 9 per cent to $1,799 per sqm as at March 2019. 

In the secondary market, average yields have compressed 47bp for the YoY to March 2019, to 7.65 per cent. Consequently, annual average capital values for secondary assets have increased by 2.7 per cent, to $1,073 per sqm.

The extent of the capital value increase for secondary assets was limited by a modest fall in rents recorded in the North and South West precincts.