The industrial property market in SE Queensland is experiencing significant shifts, impacted by factors such as supply, demand, construction costs, and economic trends. Looking ahead to 2024, predictions suggest a nuanced landscape for these regions.
Brisbane’s Industrial Market: A Balancing Act
In the second quarter of 2023, Brisbane’s industrial market saw a rise in vacant space by 15%, reaching 261,166m2. While take-up slightly eased during this period, rental growth remained promising, with prime rents growing by 3% over Q2 2023 and an annual growth of 24%.
Despite this growth, demand for industrial spaces remains strong. However, high construction costs and inflation pose challenges for developers, impacting project feasibility.
Gold Coast’s Resilience and Investment Potential
The Gold Coast’s industrial sector, dominated by SMEs, sustained strong conditions despite economic headwinds. Over 80% of industrial transactions fell in the sub $5 million price bracket, maintaining investment yields of sub 6%.
Rental rates surged, and land constraints and strong demand have kept prices firm. Though, some slowing in man-cave/self-storage strata development is noted, with a shift towards traditional industrial units.
Sunshine Coast’s Steady Demand and Owner-Occupier Dominance
Sunshine Coast’s industrial market displayed resilience due to constrained supply, sustaining owner-occupier activity for smaller strata-titled units and standalone assets. Escalating construction costs and limited land supply have redirected buyers towards existing properties rather than pursuing new developments.
While investment interest softened, rental rates continued to improve due to low supply levels and consistent tenant demand.
Forecasts for 2024: Challenges and Potential Adjustments
Despite challenges in construction feasibility and rising costs, Brisbane’s industrial market is set to witness continued rental growth. Gold Coast’s strong investment potential may see moderate adjustments in certain development segments, while Sunshine Coast’s reliance on owner-occupier activity could shape the market’s dynamics.
As developers recalibrate project feasibility amidst rising costs, the region may experience a slowdown in new supply entering the market. However, strong demand, particularly from owner-occupiers, might keep rental rates buoyant. The potential moderation in vacancy rates could alleviate scarcity, providing more options in the leasing market.
For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane
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