This article is from the Australian Property Journal archive
BRISBANE’S industrial vacancy rate has hit a six-year low, after falling for a fifth consecutive quarter, while the strong take-up is expected to bring about a new round of speculative developments through 2019.
Knight Frank’s Brisbane Industrial Vacancy update for April showed vacant space was down by 7% over the past three months for an annual fall of 18%, or 89,154 sqm.
Available prime space has dropped by nearly 30% over 12 months to 189,365 sqm following an 8% firming in as tenants continue to show a preference for new facilities.
Secondary vacancy fell by 6% in the quarter to 218,155sqm.
Take up generally improved through the first quarter to 72,955 sqm across 14 transactions, with another two tenancies also leased prior to becoming vacant. The rolling annual take up is currently in line with long-term average of 332,125 sqm.
Mark Clifford, Knight Frank joint head of industrial Queensland, said that after strong leasing activity in late 2018 with larger assets, take up in the first quarter of 2019 had been dominated by smaller tenants, all of which were under 8,500 sqm.
More activity from larger tenants with requirements of 10,000 sqm and above is expected towards the back end of this calendar year.
“It’s been a bit quiet with larger occupiers this year to date, however once the election is done, and the new financial year kicks off, we expect to see a focus from some larger groups to secure additional space,” he said.
“3PL groups are still the dominant space user at present, and this will continue for at least the balance of the year.”
The Trade Coast precinct recorded the highest take up over first quarter with nearly 26,000 sqm absorbed, and total vacancy his now 27% lower than one year ago. It also has the highest average asking rent at $115 per sqm.
“Tenants seeking proximity to the port and airport will continue to choose the Trade Coast as the best location option as the year progresses,” Clifford said.
The smaller greater north precinct has just 6,000 sqm empty after available space fell by 70% over the quarter, while the south has the most vacant space with just under 135,000 sqm. The Trade Coast has just over 132,000 sqm.
The south-east commands rents of $110 per sqm and has 41,690 sqm available, while rents in the north come in at $107 per sqm. Rents in the greater north, south and south west are all at around $100 per sqm. The south west has 77,569 sqm of space available.
No speculative accommodation is under construction as the beginning of April 1, and available speculative space has fallen its lowest level in four years at 49,398 sqm. However, commencements are imminent at Jalrock Place in Carole Park, of 7,466 sqm, and Holt Street in Pinkenba, of 10,810 sqm.
Jenelle Wilson, Knight Frank research and consulting Queensland, said further starts are expected this year with speculative developments to progress off the back of tenant pre-commitments across the south and south west.
“Speculative development starts are expected to be higher this year with major investors using speculative developments to grow their funds under management. With much of the available speculative space absorbed late last year, this will trigger a new round of construction.”
There are currently 15 industrial tenancies of more than 10,000 sqm available, with eight prime and seven secondary spaces, a level that is stable over the past quarter.
Australian Property Journal
