This article is from the Australian Property Journal archive
BRISBANE was the only capital city to record a drop in industrial vacancies over the last quarter of 2023, as prime rents bounced by 15% over the year.
According to Knight Frank’s Australian Industrial Review Q4 2023, Brisbane saw a 10% (24,055sqm) decline in industrial vacancy over the quarter, while the city saw an increase of 41% over the year as a while.
At the same time, the construction delivered to Brisbane hit a record high in 2023 at 909,000sqm, far above the previous high of circa 550,000sqm in 2008 and double the 2022’s level.
“The vacancy low point is now in the past for this cycle.Prime vacancy was stable over the quarter at 192,229 square metres. There was an increase in existing prime vacancy of 10,000sqm to 41,537sqm,” said Jennelle Wilson, partner of research and consulting at Knight Frank.
“Available speculative space decreased by a similar amount to 150,692 square metres. Speculative space accounts for 49% of total vacancy, much of this (90,200sqm, 29% of total vacancy) is still under construction.”
“Secondary vacancy fell by 22% in Q4 to 116,844sqm as secondary take-up grew in response to greater availability. Secondary vacancy is 29% higher than a year ago as vacancy begins to return to more normal levels.”
This compared to Sydney’s vacancy rate decline of 15% over 2023 and Melbourne’s 63% gain for the year. Over the quarter Melbourne’s vacancy was up 18% and Sydney’s rose 56% from 48,716sqm to 76,175sqm.
While Brisbane reported second highest prime industrial rental growth over 2023 at 15%, Sydney led at 16% and Melbourne trailed at 8.8%.
“Rental growth is expected to remain flat through the first half of 2024 before being drawn upwards by economic rents again in the second half of the year,” said Mark Clifford, head of industrial logistics, Queensland at Knight Frank.
Brisbane’s leasing activity over Q4 2023 was at 181,570sqm, relatively steady from the previous quarter.
“There was steady leasing take up in Q4, despite more moderate levels over 2023, with tenant demand stabilising from recent highs,” added Clifford.
“Take up is still five per cent above the five-year average but down from the 1 million-plus square metres we saw a year ago, when there was frenetic activity.”
In Sydney, leasing activity recorded 289,245 sqm, with the total exceeding one million sqm for the year.
While in Melbourne, take-up was up 14.8% in Q4 to 270,713 sqm, with the 2023 total at 998,897sqm.
The industrial investment market saw $973 million over 2023 in Brisbane. While Sydney was the most actively traded market, with turnover at $4.6 billion, followed by Melbourne at $2.4 billion.
“With private investors still the strongest purchaser class, the assets receiving the most traction continue to be sub-$20 million with access to short term rental reversions,” added Clifford.
“We have seen some recovery in investor sentiment noted through the start of 2024 due to greater financial market stability.”
