Gold Coast Council’s Construction Kickstart program recovery is at risk

Stephen TaylorDecember 7, 2020

The fledgling recovery in the Gold Coast industrial market is at risk as Gold Coast City Council prepares to end its Construction Kickstart program.

That is the conclusion of a new CBRE ViewPoint, which shows that industrial land sales and new construction projects are already in decline as they anticipate the program ending.

yatala_sept_5

CBRE Associate Director David Corke describes the report’s findings as ‘’extremely worrying’’ and he urges the council to extend the stimulus program to further bolster the industrial market and encourage new investment.

“While the program has been a great success, we are already seeing a decrease in land sales and design and construct projects across all Gold Coast industrial precincts as the program draws to a close,” Corke says.

“The past five years have been an extremely difficult period for the industrial market and there are tough times ahead.

‘’It would be great to see the Kickstart initiative continuing to maintain the momentum generated and to give Gold Coast businesses the confidence to expand while encouraging interstate businesses to locate in South East Queensland.”

The Kickstart initiative introduced last September aimed to boost industrial development which had been in the doldrums since the onset of the global financial crisis.

Two short term stimulus measures aimed to foster development:

  • A 100% discount for transport, recreation facilities and storm water infrastructure projects with substantial commencement between October 2012 and the end of April 2013, to be finished by the end of March 2015.

  • A 50% discount for projects with substantial commencement between March and the end of September this year with completion by the end of March 2015.

The timeframe of the 100% discount was extended by a month after poor weather at the start of this year.

Figures from Gold Coast City Council highlight a significant boost in activity during stage one of the program with 248 development applications approved and 170 projects starting by the deadline.

However, with phase 2 about to end, Corke says there are signs activity is declining, particularly in the Yatala Enterprise Area – the biggest industrial precinct on the Gold Coast.

“While receivers moved in on numerous large Yatala land holdings in the aftermath of the GFC, this market has now turned the corner,” Corke says.

“National and international companies are now moving into the area on a large scale, perceiving real benefit in locating midway between the Brisbane and Surfers Paradise/ Broadbeach CBD’s on the M1 Pacific Highway. However, this pick-up in activity could come under threat at the conclusion of the stimulus program.”

CBRE’s ViewPoint shows that 119 serviced industrial lots were sold in the Yatala Enterprise Area between 2007-2012.

yatala_aug_26

More than 50 sales were transacted in 2007, over about 25 hectares, with the average sale price $310 per square metre.

However, activity dropped to just five sales in 2010 and seven sales in 2011 – equating to just 4.2 hectares in total. The average value dropped to a low of $202 per square metres – about 35% below the 2007 peak.

The Construction Kickstart initiative helped drive 11 sales of serviced industrial land in 2012. While this is still modest, Corke says the area of land sold - 9.3 hectares - was the most since 2008. The average price recovered to $260 per square metres – the highest level since 2007.

That momentum continued into this year and CBRE has identified almost 80,000 square metres of likely development completions, including Caterpillar’s 59,000 square metre distribution centre almost ready after receiving a $500,000 fee discount under the Kickstart initiative.

Other projects to benefit include:

  • Geofrabics completed 8500 square metre facility at 69 Motorway Circuit

  • Tradetools 4000 square metre development under way at 77 Motorway Circuit

  • Marbletrend’s 3700 square metre facility in the Access Business Park, and

  • Uni-Quip Australia with a 1200 square metre facility at 4 Binary Street,

A further 60,000 square metres of new supply has been DA approved for mooted completion by the end of next year.

“The savings generated by Construction Kickstart have proved to be a key factor in the financial viability of many recent projects,” Corke says.

“This has encouraged new businesses into the Gold Coast market and given existing operations the confidence to expand. There would be clear benefits if the program was to be extended and we would urge the Council to reconsider the end-date of phase 2 to help further stimulate the Gold Coast market and encourage new investment into South East Queensland.”

Yatala precinct serviced industrial land sales: 2007-2012

Source: CBRE

The fledgling recovery in the Gold Coast industrial market is at risk as Gold Coast City Council prepares to end its Construction Kickstart program.

That is the conclusion of a new CBRE ViewPoint, which shows that industrial land sales and new construction projects are already in decline as they anticipate the program ending.

CBRE Associate Director David Corke describes the report’s findings as ‘’extremely worrying’’ and he urges the council to extend the stimulus program to further bolster the industrial market and encourage new investment.

“While the program has been a great success, we are already seeing a decrease in land sales and design and construct projects across all Gold Coast industrial precincts as the program draws to a close,” Corke says.

“The past five years have been an extremely difficult period for the industrial market and there are tough times ahead.

‘’It would be great to see the Kickstart initiative continuing to maintain the momentum generated and to give Gold Coast businesses the confidence to expand while encouraging interstate businesses to locate in South East Queensland.”

The Kickstart initiative introduced last September aimed to boost industrial development which had been in the doldrums since the onset of the Global Financial Crisis.

Two short term stimulus measures aimed to foster development:

  • A 100% discount for transport, recreation facilities and storm water infrastructure projects with substantial commencement between October 2012 and the end of April 2013, to be finished by the end of March 2015.

  • A 50% discount for projects with substantial commencement between March and the end of September this year with completion by the end of March 2015.

The timeframe of the 100% discount was extended by a month after poor weather at the start of this year.

Figures from Gold Coast City Council highlight a significant boost in activity during stage one of the program with 248 development applications approved and 170 projects starting by the deadline.

However, with phase 2 about to end, Corke says there are signs activity is declining, particularly in the Yatala Enterprise Area – the biggest industrial precinct on the Gold Coast.

“While receivers moved in on numerous large Yatala land holdings in the aftermath of the GFC, this market has now turned the corner,” Corke says.

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